Gas

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.

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 Eurasia 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, Eurasia 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

Creon Energy Fund reviews investment opportunities in Oman

LNG event in Hamburg: How to shape the value-chain of LNG

Creon Capital joined US LNG conference in Houston

Creon Capital identified LNG investment opportunities in Italy