Engie posts plunge in LNG and gas revenues on lost supplies

Tuesday, 10 November 2015

Engie added that the LNG markets saw largely reduced prices and fewer arbitrage opportunities, despite the positive impact from the significant increase in hydrocarbon production.

Global Gas and LNG revenues for the nine months to the end of September were 3.19Bln euros ($3.46Bln) from 5.16Bln euros in 2014, down 38.1 percent on a gross basis.

One of the positive LNG events of the last quarter was its contract with Houston-based Cheniere Energy for LNG cargoes to be delivered to the French Montoir-de-Bretagne regasification terminal on the Loire estuary of the Atlantic coast under a five-year contract,

Those deliveries, on an ex-ship basis, will start in 2018 at prices linked to northern European markets. The LNG can alternatively be shipped to other European terminals.

The overall income for Engie for the nine months through September 30 dropped 17.1 percent to 4.4 billion euros from 5.3Bln euros in the same period last year.

"This significant decrease is explained by the drop in oil and gas prices on the European and Asian markets largely reducing arbitrage opportunities for the LNG activity and by the disruption in supply from Egypt since January 2015 as well as from Yemen since April," Engie said.

The Yemen LNG export plant at Balhaf on the Gulf of Aden has been closed since mid-April because of conflict.

The closure of the Balhaf plant with 6.7 million tonnes per annum of production from two Trains has affected cargo deliveries by Engie to countries such as South Korea.

Total hydrocarbon production was higher by 4.2 million barrels of oil equivalent (43.5 Mbo/e versus 39.3 Mbo/e at the end of September 2014) thanks to contributions coming from fields commissioned in 2014.

In October 2015, Engie also announced that all its new investments in power production would be in projects that emit no or little CO2, in renewable energies and in natural gas.
"This economic and ecological decision to build no further coal-fired power plants, means a stop to all projects that have not yet been firmly committed," Engi reiterated in its latest earnings.