INTERVIEW: PowerGlobe sets sights on expanded LNG role across Med, S Europe

PowerGlobe Europe plans to increase its activity in the LNG space in southern Europe in the coming years, using its logistical capabilities to benefit from expected regional demand growth, a senior company official told S&P Global Platts.

Qatar's PowerGlobe has become increasingly active in the past year in LNG trading and came to the attention of the wider energy community in June when it bought a large chunk of capacity in the planned Croatia LNG import terminal.

PowerGlobe's head of European LNG, Aggelos Nikolaou, said the company was growing quickly and planned to take capacity in more import terminals in southern Europe.

"We entered the LNG supply business two years ago, and now the company is booming, especially in the last year. It's growing very, very fast," Nikolaou said.

He said PowerGlobe had booked up to 1.3 Bcm/year in the 2.6 Bcm/year Croatia LNG terminal out to 2035.

"This gives us flexibility and access to a European market that we believe in, a market that is currently dependent on Russian gas," Nikolaou said.

Through Croatia LNG, PowerGlobe will be able to access the gas markets in Croatia, Hungary, Slovenia, Slovakia and the Czech Republic, he said, and in the future also countries in the Balkans, including those with limited gasification currently.

In all, PowerGlobe wants to have 3.6 Bcm/year of LNG import capacity in Europe by 2023 to be able to serve growing markets and divert large-scale cargoes across the Mediterranean.

"The next step is to also have capacity in other terminals -- we're planning to have capacity in Italy and we are in that process now. We are discussing it with the authorities there," Nikolaou said.

Supplier sources

On the supply side, the current global LNG glut meant there were suppliers "everywhere" for sourcing the fuel, Nikolaou said.

"We prefer to get it from large producers like in the US and Africa," he said, pointing also to the logistical advantage of these sources for reaching the European market.

PowerGlobe is looking for LNG sources that are competitive for discharging in Europe, where PowerGlobe holds regasification capacity. "Our portfolio is very wide now," he said.

The key to PowerGlobe's strategy, though, is not just LNG sourcing -- it's having an efficient logistical operation from supplier to customer, Nikolaou said.

"This is the concept for us. To have a few locations with capacity booked in order to discharge vessels at the lowest cost," he said.

"We are operating in an environment where margins are not as big as before, so we try to establish long-term partnerships. It is a time to establish long-term and efficient partnerships, on both the buyer and seller side," he said.

"The logistics are very important -- you have to fully have a compatible value chain if you want to be a successful supplier."

PowerGlobe is also active in the LNG-to-power business and is looking to help develop a facility in Europe and potentially across the Mediterranean region. Such facilities will help countries in the region reduce their coal use in power generation.

Demand outlook

Nikolaou said PowerGlobe was confident that gas demand would grow in southern Europe, and its top priority is its capacity at Croatia LNG and how the company can best use that.

He said the markets served by the terminal in central Europe have no access to regasified LNG, but that in three years LNG would have a much bigger share of the regional market.

He said that from the second year of operations at Croatia LNG, demand for LNG in countries such as Hungary and Slovenia would be much higher.

"The market is going to be totally different," he said, pointing to the rapid penetration of LNG into southern European markets in the recent past such as Spain, Portugal, Italy, Greece, and Turkey.

Turkey, he said, had "huge" LNG import capacity with four operational terminals.

PowerGlobe is also eyeing the Spanish LNG market and plans to deliver a cargo to Spain next month. "Spain is a big market, and very accessible," he said.

The company's ambitions are also wider still. "The success story is to have access to terminals, to organize vessel logistics and then you have a chance to send the cargo anywhere," he said.

In a market where new entrants are still fairly rare, PowerGlobe has certainly hit the ground running in the European LNG space, and its plans for more capacity and infrastructure in the region suggest it is in it for the long haul.