No bailout needed for state-owned gas trader

Geoplin, Slovenia's largest natural gas trader. Photo: STA

Slovenia’s largest natural gas trader Geoplin has announced it has received an extension of a liquidity loan agreement from its majority shareholder, the energy group Petrol, and will not need a capital injection from the state in the current market situation.

“Geoplin has diversified its procurement portfolio and purchased enough gas from European partners for this year, which means that Slovenian customers are not dependent on the long-term natural gas supply agreement with Gazprom, even if the supply is further reduced or even stopped,” the company announced after its shareholders held a meeting on 29 November.

Th news comes after months of speculation as to whether Geoplin, part owned by the state, might have to be nationalised. The government set aside roughly €700 million in a revised budget for this year if a capital increase was needed, even as some experts warned that the company was experiencing liquidity problems, not solvency issues.

The company now says it has been managing liquidity and business risks and limiting the potential negative effects of substantially reduced supplies of natural gas by Gazprom.

Given that certain procurement activities have been implemented and sources diversified “supply to Slovenian customers will not be affected even in the case of a potential complete halt of supply by Gazprom,” provided that “the European gas market continues to function,” the company said.

For next year, a part of gas supply has already been agreed with European partners, whereas a portion of the needed quantity has been secured under a three-year contract with Algerian Sonatrach based on which natural gas will start flowing to Slovenia on 1 January 2023.

The shareholders were also briefed yesterday on the financial effects of the limited supplies from Gazprom. The company said the daily amounts were unpredictable, which has prevented a normal and efficient management of the supply agreement in a way that would prevent Geoplin from suffering any significant damage.

“Based on experience with supply insecurity in the past and given the high volatility of natural gas prices, there is a real risk that the negative result from this agreement would continue in the future,” it said.

As a result, the agreement with Gazprom “can no longer be managed efficiently.” The shareholders have therefore agreed to “legal transactions and acts to protect the interests of the company”. “Geoplin has called on Gazprom to resolve the breach of the agreement and provide full compensation for the damage resulting from such breach.”