Gas


Relations between Moscow and the EU have hit their lowest level in decades. But feedstock industry expert Fares Kilzie says the bloc’s current energy diversification attempts will not leave Russian firms stranded.

There’s hardly anyone who knows more about the German petrochemical industry’s enormous need for resources than Russian entrepreneur Fares Kilzie. In the early 1990s, he was based in Germany helping companies such as Bayer and Süd-Chemie secure petrochemicals from Russia.

After 2001, Kilzie went back to Russia and eventually founded the Creon consultancy helping European companies understand the Russian energy market. 2016 saw the establishment of the Creon Energy Fund in Luxembourg, which provides guidance for investing safely in Russia.

DW met up with Fares Kilzie in Berlin to talk about the future of Russian energy supplies to Germany and the European Union as a whole.

DW: Talking about EU-Russian business relations these days, also in the energy and feedstocks sectors, is a bit like walking through a minefield, following Russia’s falling out of grace with the West over its perceived role in the Ukraine conflict, would you agree?

Fares Kilzie: In my business life, relations between Russia and the EU have never been worse than they are today. But I have to add that we experience this bad state of relations mainly in Brussels, and we don’t see it in Berlin. Russia and Germany are still having a very constructive dialogue even while relations between Russia and the EU in general are in a bad state. Dialogue between Moscow and Berlin is strong, despite heated arguments being exchanged sometimes.

Russia has been a very reliable supplier of hydrocarbons for Germany all along, concerning both natural gas and oil. As for oil, Rosneft has been one of the major oil suppliers in Germany, and Gazprom the main provider of gas — maybe Novatek will become a third important player with LNG [liquefied natural gas].

I gather from your answer that you don’t believe the good times for Russian oil and gas suppliers to the EU are coming to an end. But don’t increased attempts in Berlin and Brussels to diversify supplies and thus reduce dependence on Russian sources tell a different tale, especially when it comes to natural gas deliveries?

When it comes to debates about reducing the amount of pipeline gas coming to Germany from Russia, I was one of those who expected that to happen even before the crisis in relations with the West started. I was in contact with German feedstock buyers, and they were telling me as early as the 1990s that they would have to diversify their supplies. So I know this approach very well. I believe it’s a good one, because risks have to be spread when it comes to feedstocks.

Many analysts insist Germany — and other recipients in the EU — could have easily done without the controversial Nord Stream 2 gas pipeline. What’s your take on this?

Touching on the current Nord Stream 2 controversy, Russia in this project is only assuming the role of a technical partner, meaning it lays the 1,200 kilometers of the pipeline to Germany and supplies the gas, but any decisions beyond that have to come from Germany. In my eyes, the project is very important for the chemical industry in Germany. Parts of the industry are already migrating from Germany as there are at times not enough feedstocks for the industry. In order to create new products and jobs, you also need large amounts of gas at a reliable price — and you need it now, not in five or 10 years. Russia is offering this opportunity of getting more by 2020.

But isn’t it rather risky for public joint stock company Gazprom to keep focusing almost exclusively on its pipeline business?

In Russia, I’ve been know as a critic of Gazprom for exactly that. Many see Gazprom as the holy cow of Russia, generating a big share of the country’s income, so that seems to make it untouchable. There have been a lot of changes in Gazprom’s management structure over the past two months and there’s more to come. We’ve always said in the Russian media that Gazprom is inefficient, not using the latest technology and moving very slowly toward the gas refining business.

I never shy away from the fact that this sort of miscalculation could lead to trouble in the future. Only time will show how it will fare by focusing only on its pipeline business and not expanding its activities to LNG. But we’ll only have an answer to this in five or six years from now. My personal opinion is that they made the wrong decision also by trying to convince the Russian president that the shale gas story in the US would be ending soon — it’s not ending. On the contrary, it’s taking geopolitics to another level.

In the second quarter we expect to have equilibrium between the price for pipeline gas and that for liquefied natural gas, which is very good for the market.

According to the European Commission, the EU’s gas demand is around 480 billion cubic meters and is projected to remain stable in the coming few years before going down as a result of the bloc’s climate protection policies and the increased use of renewables. So, aren’t today’s investments in gas deliveries shortsighted anyway?

Let’s face it, gas is one of the most environmentally friendly products that we have at the moment, with relatively low CO2 emissions. It’s very easy to handle. We’ll see a lot more electrical cars in the future; we’ll see more wind farms and solar energy facilities. Right now, though, the German feedstock problem is that neither wind nor solar can replace the physical hydrocarbon to produce ethylene for example.

As soon as there are reliable pipeline supplies, the chemical industry will start investing. BASF (Wintershall/DEA) and others are trying to secure the feedstocks as soon as possible so as not to lose out in the competition with Asian or even US producers. Several million jobs are affected, directly or indirectly, as we’re talking about construction chemicals, paint chemicals, chemicals for the auto industry and so on. Half of any ordinary car is made of petrochemical components (polycarbonate, polyethylene etc.), so you have a wide range of products that are needed here.

Private Russian energy company Novatek is looking to establish a foothold in Europe including Germany where it aims to open a regasification facility in Rostock by 2022 – and this against the background of the German government having promised the US administration it would build two LNG terminals of its own to also receive American gas …

Novatek is also looking at the Spanish market, the Italian and Moroccan markets, and it’s looking to build regasification facilities in order to supply gas to customers, who have no access to pipeline gas. Rostock, with its long-term trade ties with St. Petersburg, can play a major role for the German economy. It’s a gateway to Germany. To have a regasification facility there, coupled with reliable gas supplies from Novatek to serve the German market is a nonpolitical thing. It’s only a small-scale regasification unit.

The Novatek activities in Germany can’t really be seen as a threat to any other LNG supplier because of the low volumes to be involved.

For 25 years, Fares Kilzie has been helping European companies doing or wanting to do business in Russia. He’s the founder of Creon Group, an independent investment and management association focusing on the energy and chemical industries in Russia and the Commonwealth of Independent States (CIS). The Creon Energy Fund invests in Russia together with European technology partners.

The interview was conducted by Hardy Graupner.

Link: https://www.dw.com/en/expert-russia-to-remain-crucial-feedstock-supplier-despite-spat-with-brussels/a-48213356



The Worldwide Fund for Nature (WWF) and CREON Group have announced results of the fifth Environmental Transparency Rating of Oil & Gas Companies operating in Russia. The announcement ceremony took place at the Analytical Center of the Government of the Russian Federation in Moscow on the 30th of November.

The Rating project has been implemented with support from the United Nations Environment Program and with participation of the Ministry of Natural Resources and Environment of Russia and the Ministry of Energy of Russia. Just as in previous years, the rating process has been executed by National Rating Agency, while the Luxembourg-based fund management company Creon Capital participated as a partner in the project.

The results of the rating in 2018 both affirmed yesteryear leaders’ standings and revealed new prominent up-and-coming participants. As in the previous year Sakhalin Energy (Sakhalin-2), a joint venture of Gazprom, Shell, Mitsui and Mitsubishi, ranked first, followed by Zarubezhneft. The latter company appears in the top 3 for the first time. Exxon NL achieved the third rank.

For the first time, special diplomas were awarded to winners in each of three Rating categories: Surgutneftegaz and Zarubezhneft shared the first rank in terms of ‘Environmental Management’; Caspian Pipeline Consortium (CPC) scored the best result in ‘Environmental Impact’; and LUKoil convinced the rating agency regarding their ‘Information Disclosure’.

The high importance of the study was underlined by Denis Khramov, the Minister of Natural Resources and Environment of the Russian Federation: “The public initiatives of the Worldwide Fund for Nature such as the Transparency Rating of Environmental Responsibility of Oil & Gas Companies operating in Russia represent an important input in improving ecological policies in the industry, and are also increasing the public availability of environmentally significant information”.

“Recently we have witnessed increasing support and attention to our rating from relevant government bodies such as the Ministry of Natural Resources and Environment of Russia and the Ministry of Energy of Russia, which confirms the importance of ratings in the system of public administration of environmental risks and impacts”, said Alexey Knizhnikov, Oil & Gas Program Leader, WWF Russia. “At the same time, it should be noted that two of four Russian state oil and gas companies, namely NK Rosneft and Zarubezhneft, have been increasingly involved in the rating’s development compared to previous years. Their representatives have always been participating in methodology development and progress review meetings”.

Pavel Sorokin, Deputy Minister of Energy of the Russian Federation, also addressed his support to the rating’s initiators: “Improving social and environmental responsibility of companies in the oil and gas sector in Russia is becoming an increasingly pivotal task in the field of public administration and in achieving better competitiveness of Russian business. The non-government initiative to conduct the rating has proven its effectiveness within the five years since the project started. The dialogue between oil and gas companies and the society on environmental safety issues should be actively pursued with this project”.

Head of CREON Group und Chairman of Creon Capital, Fares Kilzie, underlined in his speech: “CREON Group in general, and Creon Capital in particular, fully support and promote the idea of “responsible investments”, which promotes the rapidly improving investment climate in Russia. As an investment fund we identify outstanding business opportunities, when Russian oil and gas companies improve their ecological footprint. We are ready to contribute in financing sound projects such as advanced APG processing and LNG as an alternative energy source to replace traditional sources fuels such as Diesel and heavy oil. In this context, I would like to mention NOVATEK as a successful endeavor, that grow to the largest Russian LNG producer. This company pioneers with the implementation of large-scale LNG, which may change the whole industry’s structure.

DOWNLOAD the rating brochure (in English). 

Picture: Representatives of the top-3-ranked companies Sakhalin Energy, Zarubeshneft and Exxon (front row), accompanied by the rating team and the winners of three sub-categories – Surgutneftegas, KTK and Lukoil.

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ABOUT THE RATING

The “Environmental Transparency Rating of Oil and Gas Companies” operating in Russia is an independent project, invented by the Fund’s initiator Creon Energy in 2014. More than 30 Russian and international enterprises are being rated annually regarding their environmental policy. The rating is conducted independently by the Russian Rating Agency, according to a sophisticated methodology developed by the Worldwide Fund for Nature (WWF) Russia. In 2018, Creon and WWF also started to rate oil and gas companies in Kazakhstan, a global rating will be conducted soon.

Learn more about the ratings history (external link)

OBJECTIVES

For a long time the mostly state-owned oil and gas companies in Russia were closed shops. Reports on environmental sustainability – missing. Manuals how to deal with hazardous situations – out of date. Recultivation projects for oil spills – what for?

In the past couple of years the situation has changed tremendously: Even large state enterprises such as Rosneft started to report on environmental responsibility in detail. Lukoil installed solar-based power generation on their oil production plants. And the gas associated with the process of oil refining has increasingly been processed or transferred to pipeline systems instead of being burnt.

The rating aims to accompany this process towards more environmental responsibility. The disclosure of information has significantly increased within the five years the rating has been conducted. Companies’ ecologists discuss the ratings results and best-practice examples. The product’s presentation annually turns out to be a gathering of specialists working for competing companies in Russia. But all of them try hard to get the oil and gas production “greener”. In 2018 the rating’s results have been presented in the Analytical Center of the Russian government, representatives of several ministries attended the event.

Learn more about the rating’s objectives (external link)

METHDOLOGY

The methodology behind the rating of oil and gas companies in terms of environmental transparency and responsibility has been developed in 2014 and reviewed since then on an annual basis. Every year all Russian oil and gas companies are invited to participate in a round table discussion with WWF specialists to discuss the details and propose changes. Large companies such as Rosneft and Lukoil contribute to this discussion constructively just as much as smaller producers such as Salym Petroleum.

According to the metholodology the rating agency assesses the oil and gas companies along the value chain from hydrocarbon production, processing to transportation. The amount and quality of disclosed information is crucial for their placement in the rating, but also the way how comapnies deal with accidents, whether they inform about it or deploy a harzard prevention and risk management system. Also the producers measures to process associated petroleum gas (APG) during the refinery process matter, some still burn APG instead of using it.

Learn more about the methodology (external link)



The Sultanate of Oman is one of the most stable countries in the Middle East. Since the country’s political opening in 1971, the government has maintained constructive relations with all its neighbors, and Oman plays an active role in the Gulf Cooperation Council (GCC). Thanks to the abundance of oil and gas, economic output has tripled since the turn of the millennium, though, with the collapse of the oil price the growth to slow down two years ago.

Today, Oman is open to international cooperation, as evidenced by exploration projects with partners such as Shell and Total in the oil sector. In gas processing, the sultanate plans to increase gas liquefaction capacity to meet growing global demand for liquefied natural gas (LNG). The Creon Energy Fund is ready to participate in such projects as an equity partner. That is why a delegation of Creon Capital headed by Chairman Dr. Fares Kilzie on October 28 and 29 visited Oman’s capital Muscat.

The focus of the fund’s delegation trip was a visit to the “Gas & LNG Middle East Summit” hosted by Wisdom Events. The high-caliber participants included, among others, the Minister of Oil and Gas, Dr. Ing. Mohammed bin Hamad Al Rumhy and Harib Al-Kitani, CEO of Oman LNG. Both underpinned their commitment to gas processing projects, which should help to strengthen and diversify the country’s economic growth sustainably. Creon Capital Chairman Fares Kilzie expressed in a panel discussion that the Luxembourg Creon Energy Fund will contribute to the necessary investment in LNG infrastructure.

On contrary to the oil sector the gas processing industries need equity partners, when it comes to the realization of new projects, Kilzie emphasized: “The global hydrocarbon market is changing. Chinese companies, for instance, approach us on monthly basis to ask for solutions how to import more LNG. To serve these demands, we need to invest not only in large-scale but also in small- and mid-scale LNG plants.”

These smaller tonnages with a capacity of usually less than 1.5 million metric tons per annum, are dedicated to decentralized heating plants, truck fueling stations and so-called bunkering operations, the refueling of ships with LNG. If the transport and logistics sector operate to a large extend on LNG-basis instead of Diesel and heavy oil, emissions could be reduced tremendously. In this context Dr. Kilzie argued: “We consider gas as the greenest available energy source for the transport sector.”

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For further information please contact: Leila Nettaf, T. +352 26 49 79 2203 (nettaf@creoncapital.lu)

Pictures:

Dr. Fares Kilzie, Chairman of the board of Creon Capital, debating with David Kalife, CEO of Oman Oil Marketing.
Florian Willershausen, Director Business Development, Marketing and Communications of Creon Capital, speeking on investment opportunities in the LNG sector.

 



As much as some may be surprised in the West: ecology and Russia – this combination is no longer a contradiction today. Not only since the Year of the Environment took place in 2017, the world’s largest country moves slowly but visibly in the right direction in terms of environmental issues: The burning of associated gas in the oil production is decreasing, landfills have been closed, recycling is being promoted by the state actively. Above all Russian oil and gas companies have to offer something, which could boost the EU-countries leap towards a cleaner economy structure: Liquefied Natural Gas (LNG) as a fuel for decentral regions and the transportation sector.

Ecology and Russia – this combination also becomes relevant for companies. Therefore, CREON Group invites to the second Berlin Conference this year. Businessmen and experts from both Russia and Germany will discuss how environmental responsibility can be shaped and improved further. Which solutions can German companies provide for Russian partners who want to tackle the topic? And conversely, can Russian companies contribute to a “greener Europe” by delivering Liquefied Natural Gas (LNG)? These discussions will be supported by the German Eastern Business Association (OAOEV) and the German-Russian Chamber of Commerce (AHK).

During the conference we will present the results of our environmental responsibility rating in Russia’s oil and gas industry. For the fifth time, WWF Russia and CREON conduct the independent rating of major oil and gas companies regarding their efforts and transparency in terms of environmental responsibility: Who renatures oil-contaminated areas? Who is flaring on associated gas, who is not? How transparent are corporations in reporting on ecological issues? In the meantime, the rating has been established as a credible, objective and recognized tool to push the oil and gas companies towards on a more sustainable course. The initiative to conduct Global rating of the 32 biggest world oil and gas companies will be also presented in Berlin.

The aim of the conference is to promote ecological responsibility as a common topic for Germans and Russians. Therefore, we are pleased to welcome high-ranking politicians from both countries, who find common interests in the field of ecology beyond the well-known political dispute topics. Above all, however, entrepreneurs from East and West should be brought together: In Europe’s East, a market is now growing with its awareness of the problem, for which Germany particularly could supply “green” technologies. CREON has set itself the goal of connecting these networks.

 

Venue and Timing

Wednesday, December 05th 2018

Time: 13.00 – 19.00

Hotel Marriott, Berlin (Potsdamer Platz), Inge-Beisheim-Platz 1, 10785 Berlin

 

DOWNLOAD the program here

MORE INFORMATION you may find on our website.



Despite sanctions imposed by US-authorities on Russia, construction of large infrastructure projects continues. Recently Novatek opened the second of four production trains on Yamal peninsula, freezing natural gas down to 164 degrees below Celsius to get it transportable. Next year the capacity of 17,4 million metric tons of liquefied natural gas (LNG) will be reached, but even before this the new Russian energy giant Novatek is widely expected to make an investment decision on a second LNG-factory worth of more than 18 billion Euro. Other huge projects worth dozens of billions are planned or under construction along the Baltic shore and in the Russian Far East.

However, it remains difficult for foreign investors to enter large infrastructure projects such as the gas processing plants or the railway corridor Moscow-Kazan. An obvious reason is that companies themselves hesitate to invest due to sanctions-related risks and uncertainty. But they might be encouraged to invest if governments simplified mechanisms to issue state-guarantees. Creon Capital works closely with the Association of European Businesses (AEB) to achieve progress on this matter.

Several investment projects are stalled because it takes too much time to issues state-guaranties, which are usually being granted to smaller or highly secured projects only. This means in fact that the government does not issue them. Even governmental institutions such as VEB and its subsidiaries require tough preconditions, which are difficult to fulfill. Therefore, the influx of FDI remains limited and both European and Chinese investors hold back their capital to finance projects.

Creon Capital proposes the Russian government to increase its efforts to ease the conditions for state-guarantees, which must include bureaucratic processes, financial preconditions, due diligence, monitoring and decision-making procedures. The existing institutions of industrial development such as VEB and its subsidiaries shall expand their instruments to include a wider range of economic sectors and increase the minimum amount of funding for single projects.

For further information please contact:
Leila Nettaf
T. +352 26 49 79 2203
E. nettaf@creoncapital.lu



Since political relations between Russia and the West deteriorated, the bilateral partnership between Moscow and Beijing has gained importance. At least since 2014, politicians from both countries have increasingly and resolutely proclaimed a closer alliance of the major powers. Consequently, a more comprehensive cooperation between the countries, was also claimed at the major bilateral China-Russia Conference, which took place on May 29 and 30 in Beijing. As a partner of the Russian International Affairs Council (RIAC), CREON Group supported the summit in China’s capital. Almost 300 delegates participated in the event, which was organized by the China Strategic Cooperation Council with Russia and the Institute for Russia, Eastern Europe and Central Asia. Both organizations belong to China’s Academy of Social Sciences (CASS).

The title of the top-class conference promised optimism: “China and Russia: cooperation on the way to a new era.” Dai Bingguo, a former deputy of the People’s Republic of China and co-chairman of the Chinese-Russian Committee for Friendship, Peace and Development, praised the common strategic interests of both countries. Igor Ivanov, Russia’s former foreign minister (1998-2004) and current chairman of the RIAC, was pleased with the intensification of the relationship in recent years, the importance of which should not be underestimated in an increasingly unstable world. Politically, according to the quintessential high-level discussions, China and Russia became recently closer than ever before.

And economically? There is still room for improvement, as representatives of both countries openly explained. Li Sin, senior academic researcher at the academy and Director of the Center for Russian and Central Asian Studies at the Shanghai Academy of Social Sciences, noted “an absolutely insufficient level of direct investment” from the Chinese side in Russia and vice versa. The reason for this: “There is a lack of mutual trust and understanding.”

Yevgeniy Nadorshin, Chief Economist of the investment company “FK Capital” said, he was missing “equal relations”, so he came to a similar conclusion. Chinese were wrong if they try to explain their low investments in Russia with existent investment barriers: “China has already overcome much larger investment hurdles in Africa years ago.” Instead, it should be time to admit: “We do not trust each other, that is not a question of customs barriers.” Andrey Klepach, Chief Economist and Vice-President of Vneshekonombank (VEB), found reasons for the mutually low level of foreign direct investments (FDI) also in Russia: “We must allow investments in the extraction and processing of natural resources and large-scale infrastructure projects”, the former Vice Minister of Economic Development demanded. It appears to him that China’s investment activity in Russia is too limited to the role of a creditor.

CREON had already systematically collected information about the FDI-influx for the conference one year ago: $ 62 billion, the total amount invested by Chinese financial institutions in the Russia’s energy sector. This rough figure has not changed significantly for a year. And it continues to apply that 98 percent of China’s FDI flow into the commodity and energy sectors.

China, it seems, still considers Russia as a pure raw material supplier. For Fares Kilzie, the founder of the Creon Group, this is a dangerous perception: “If the oil price moves up or down harshly, there will be conflicts between supplier and customer. Investors should swiftly diversify their economic relations with Russia.” However, this does not necessarily mean to invest in completely different industries instead: “Diversification can be achieved easily by just processing raw materials into products in Russia in order to export them to China, ” Kilzie suggested. Projects dedicated to the processing of gas to methanol or agrochemicals, for instance, would be completely free of sanctions while being economically very attractive. The Creon Group offers Chinese as well as European partners to accompany such projects as a co-investor. There are a lot of projects to be realized.



The World Wide Fund for Nature (WWF) Russia and the Luxembourg-based fund management company CREON Capital have agreed to create a «Global Transparency Rating of Oil and Gas Companies». The survey will involve 30 global commodity producers from around the world, it will be focused on their efforts to strengthen their environmental responsibility. Therefore, environmental strategies will be evaluated as well as concrete measures towards more environmental protection in a sector, which is critical for nature and human being. This will be the first worldwide study, which provides transparent and comparable data and information on environmental responsibility in the global oil and gas industry. WWF Russia and CREON Capital signed a declaration on May 25 during the International Economic Forum in Saint Petersburg.

The rating will be presented on several events later this year. Alexey Knizhnikov, WWF Russia’s head of the Environmental Policy program in the Fuel and Energy Complex, said: «The rating will allow us to assess on an annual basis the efficiency and transparency of oil and gas companies in terms of environmental responsibility: the development of renewable energy as an alternative to fossil fuels plays a role as well as activities to conserve biodiversity, the companies’ programs for environmental protection and renaturation.» In the past four years, when WWF and CREON conducted the rating for Russian companies, this format had become a platform of constructive dialogue between energy companies and civil society, Knizhnikov remembered: «Now we want to expand this platform to a global level, and we invite the industry to join the dialogue on ecological responsibility.»

Dr. Fares Kilzie, Chairman of CREON Capital, commented: «Our role as an investment fund is that of the co-investor in environmentally responsible projects, such as the processing of associated gas and the establishment of supply chains for LNG as an environment-friendly alternative to heavy fuel oil and diesel in the transport sector.» For him as a Fund manager it were not only possible and necessary to realize «green» projects, said Kilzie, but also economically reasonable. «We therefore support our partner WWF in every respect in order to promote the topic of ecological responsibility in the global oil and gas industry.»

 

About us:

The Rating of Environmental Responsibility in the Russian Energy Sector has been launched in 2014 as an initiative of the CREON Group and WWF Russia. The project’s objectives were to conduct tangible and comparable information on environmental activities of oil and gas companies. Thanks to the publicity effect of the rating, some influence could be exerted on the companies in Russia, which partly increased transparency, decreased pollutions or developed an environmental risk-management-system. In 2017, the rating was first presented in Europe, also a separate rating of the Kazakh oil and gas companies was conducted.

The World Wide Fund for Nature (WWF) Russia works with state institutions, companies, experts and local communities to change people’s attitude to nature. The priorities of WWF’s various activities in Russia include the protection and preservation of biodiversity, sustainable forestry and fisheries, the «green economy», environmental governance, climate and energy.

CREON Capital is a fund management company based in Luxembourg. It manages the CREON Energy Fund, which actively invests in energy projects. Green technologies and renewable energy are among the focus areas of investments. The private equity fund also invests in the processing of gas and the construction of a liquefied natural gas infrastructure.

Press Inquiries:

CREON Capital
Florian Willershausen
Director BD & Marcom

Tel. +352 621 235 126
E-Mail: fw@creoncapital.lu
www.zs-rating.ru/

 

Pictures:

Florian Willershausen (CREON Capital, left) and Alexey Knizhnikov (WWF Russia) signed a Memorandum of Understanding, stating that both organizations will conduct a Global Transparency Rating of Oil and Gas Companies:

 

 

 

 

 

 

 

 

 



Several German cities plan to ban diesel-powered vehicles from city districts – further bans will follow throughout Europe. Stricter sulfur and carbon dioxide limit values on the North and Baltic Seas, as well as later in the Mediterranean, are forcing the ship-owners to make extensive retrofits. And so, the diesel gradually fades from roads and sea routes.

LNG could benefit from it. The burning of liquefied natural gas produces only a fraction of the pollutants compared to diesel, gasoline or heavy fuel oil – and the range is greater. But it lacks the value chain – from liquefaction to transport fueling the entire supply-chain is missing, preventing the fuel’s final breakthrough in the gas station business. How this can be achieved was a subject of the recent LNG conference organized by Wisdom Events in Hamburg.

Wisdom gathered the who-is-who of the industry: representatives of ENI, Elengy, Gas Natural Fenosa, Uniper, Fluxys, Linde subsidiary Nautricor, Baker Hughes and NASA were present to discuss the chicken egg problem: If the decrease of LNG in large quantities is not secured, nobody will run a gas station. As long as LNG prices fluctuate, a freight forwarder will shy away from switching its fleet to LNG. Without the critical mass of demand, an LNG supplier will not offer the gas on long-term contracts with reasonable pricing.

Creon Capital is ready to invest in projects along the value chain for small and mid-scale LNG through the Creon Energy Fund. “We believe in strong medium term growth in this segment,” said Florian Willershausen, BD Director of the Luxembourg Private Equity Fund. “Banks are hesitating to finance because of the high volatility in the market. As a consequence, an equity partner like us is more than ever needed to realize the projects.” Creon Capital is currently evaluating several potential LNG projects and technology providers in Europe.



The US is likely to replace Russia as the world’s largest gas producer by the end of 2018. Within ten years, US companies have been able to keep developing their fracking technology. As a result, the country is not only able to meet domestic demand through domestic gas production, but also to gain a foothold in exports.

America’s LNG market was the subject of a conference organized by CREON’s partner Wisdom Events partners on 27 and 28 February in Houston, Texas. Creon Capital was on board as silver sponsor. Florian Willershausen, Director of Business Development, Marketing & Communications, discussed the LNG market and current challenges in a panel discussion with representatives from GE, Red Box, SNC Lavalin and Monkey Island LNG.

There are many challenges for the US gas market, though. It is not a coincidence, that in the past two and a half years no final investment decision has been made for the construction of new large-scale export terminals: The US manufacturers have difficulties to find customers for their hydrocarbons, given the current oversupply of gas. Since the good utilization of the terminals is crucial for banks and equity partners in the context of project financing, many projects are on hold.

Over the next few years, Australia will bring more gigantic quantities of liquefied natural gas onto the world market. At the same time, Russia is increasing its export of gas in the form of LNG and pipeline supplies. Nonetheless, analysts expect China’s rapidly growing demand to rapidly absorb additional available volumes.

In general, the Creon Energy Fund is also holding back on the financing of the large-scale LNG infrastructure. Instead, Creon Capital, as a fund manager, is examining entry into technology companies that make the handling and transportation of LNG more efficient. An entry into small scale LNG projects, especially in Europe, can also be an attractive topic for the Fund. The latter are aimed primarily at the supply of decentralized power plants, as well as the refueling of ships and truck fleets. These are growth markets that CREON keeps a clear eye on.

You have any questions, remarks or project ideas? Please contact us: fw@creoncapital.lu



There are some good news from Italy, most recently: The country left a deep recession crisis behind. The economy is growing again, the situation on the labor market has eased, no more banks threatened to collapse due to large non-performing loans. At the same time, the country returns to an economic growth with appears to be much more sustainable than ever before. Italy fulfilled and over-fulfilled the targets of the European Energy and Climate strategy already, reducing the level of energy consumption by 24 percent compared to the 1990’s, “Renewables” account already for 18.6 percent of the energy mix.

These “good news” are no “bad news” for the gas industry, though. Finally, Italy pushes forward reforms of the gas distribution market and the diversification of gas supplies. The regulator is keen to develop a liquid gas hub for Southern Europe, which will lead to more competition on the domestic market and increased exports soon.

Creon Capital identified five directions of investments in Italy, which could provide attractive opportunities for the Fund and its partners. This is the conclusion of a study, which was presented by the Fund’s Business Development Director Florian Willershausen in Milan during a Wisdom conference on Small Scale LNG.

In particular, the Italian market is in need for additional gas storage facilities, Small Scale LNG terminals, new trading platforms, new LNG suppliers and operators, who are capable to provide solutions for peak shaving and emergency management.

Concrete investment projects are under discussion already. The presentation can be downloaded under this link. In case of questions don’t hesitate to contact us under: info@creoncapital.lu