It will be difficult partner to talk about changes in the conditions of the contract.
– The fact that financial institutions such as investment banks tend to be a party to contracts for the supply of gas, is obvious. They are an important element in this market – says Tomasz Chmal, an expert. Energy of the Sobieski Institute. As analysts comment on reports of the sales contract by Qatargas Polish? – Details of the transaction are as reliably – says a former high-manager in the fuel and gas. – Do not rule out that it was Merrill Lynch saw an investment opportunity and has begun the redemption agreement – he adds. Another person familiar with the gas sector confirms that a few months ago reached the information that the Qataris are looking for opportunity to sell Polish contract.
Theme Katarczyków
Why Qatargas would seek to get rid of agreement with PGNiG? Experts stress that the Qataris wanted to avoid renegotiating the contract with the Polish side. PGNiG authorities have repeatedly stated that they want to push in talks with the supplier changing circumstances. – We’ll have the contract multifaceted przenegocjować. These are the issues of price, delivery time, and many other things – announced earlier this year in the Polish Sejm, president of the group Mariusz Zawisza.
Recall: agreement assumed that deliveries will begin later this year . The problem is that the LNG terminal in Swinoujscie will be able to take the first shipments only in 2015. Though the parties had never revealed the pricing conditions, analysts estimate that 1 thousand. cubic meters. PGNiG gas from Qatar can pay more than 650 dollars., much more than raw material costs purchased from other directions.
Qatargas, as explained by one of our interviewees, did not want to renegotiate the contract and create a precedent demoralizing other contractors. Other clients might require similar changes in the agreements.
– Investment bank, taking such a contract, he buys a hen that lays the golden eggs – considered one of our interviewees. Recalls that the contract is valid for 20 years.
Consequences for PGNiG
What such a transaction would mean for PGNiG? – This would not be in my opinion, bad news for our company – says Tomasz Chmal. – Both Qatargas and Merrill Lynch are major players and both these entities can negotiate terms of the contract for the supply of LNG – he adds. The difference could rely on the fact that unless the conversation Katarczykami only apply to the energy sector, whereas negotiations with Merrill Lynch could include many other industries.
Optimism expert from the Sobieski Institute, however, do not share other party. – The prospect of reducing the burden, which is currently PGNiG Qatari contract, gave up – says Andrzej Szczesniak, in 2002-2006 associated with the Polish Organisation for Liquefied Petroleum Gas. In his opinion, the Polish side would not be able to reduce costs. – Contract would be virtually non-negotiable – says another expert.
renegotiate the contract
Screenplay compromise, in which there is a change of contract, would arise PGNiG on the line – Qatargas, analysts argue. Concession from the Polish side, however, would be to propose Katarczykom shares in any of our energy companies, for example. In Energa (Qatargas is part of a large state-owned Qatar Petroleum, which conducts extensive energy projects). The acquisition contract by the bank reduces the likelihood of a compromise scenario.
– If it was a conversation between state PGNiG and Qatargas state, it is possible government intervention. When a party is a private investment bank, any inter-State relations support no longer be – emphasizes Szczęśniak. Also warns against recourse to arbitration, as it once did, PGNiG and Gazprom. – If we decided on a similar movement would meet with an extremely tough opponent – he concludes. Institutions such as investment banks have a great experience and the best professionals from the arbitration process.
Merrill Lynch sells LNG Bałtom
Gas, as well as other fuels, as well as the materials may be investment banks – depending on the market situation – attractive. A good example is Goldman Sachs, which between 1999 and 2010. Fifth of their income owed just trade in raw materials. Current CEO Lloyd Blankfein bank who conducted the institution by the financial crisis originates from the part of the bank responsible for raw materials. His career started in the bank as a broker precious metals.
Merrill Lynch, which in the crisis was absorbed by Bank of America, should not be in this category to the players heavyweight. Part of the bank responsible for the gas trade, located in London, however, has serious ambitions. The Bank provides a liquefied gas to the two terminals in Europe: one in the Netherlands and one in the UK.
In addition, this year launched service contract for the supply of blue fuel to the Baltic countries. In the summer began the implementation of LNG supplies to Dubai. Seized from Katarczyków contract may provide for the division extremely attractive deal.
The more the material market is no longer so attractive for banks. Achieve high profits when can something cheap to buy, and expensive to sell, which is supported by market volatility. This, however, Europe is small, so that the top players at the beginning of this year proclaimed reducing its presence in the energy market in Europe. In addition, the commodity market has tightened competition – much more entities implement this type of activity, which increases competition and reduces margins. Changed the rules that restrict banks to leverage, so borrowing money under commodity operations. Also changed the climate around the banks where reluctant to look at it, that they support both commodity transactions, and actively participate in them.
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