SOCAR Trading intends to participate in LNG projects

Baku. 8 February. REPORT.AZ/ Trading house of the State Oil Company of Azerbaijan Republic (SOCAR), SOCAR Trading, which this year commissioned the ambitious integrated LNG-to-power project in Malta, expects to agree deals for similar projects elsewhere in the world in the coming years.

Report informs citing the S&P Global Platts, SOCAR Trading CEO Arzu Azimov said.

He noted that, in a shift from traditional LNG supply and trading models, SOCAR Trading can focus on working with partners in mostly developing countries to help satisfy their power generation needs through LNG and linked power stations: "It was an opportunity to create a consuming project for LNG. We see ourselves as pioneering in this field".

A. Azimov said that the integrated LNG-to-power project in Malta - could be a model for the future, especially in growing economies in Africa and Asia: "We are prepared to look at any location - we do all the necessary due diligence and look for partners looking to build or modernize a power plant. The Malta project was very complex with a lot of technological innovation. We learned a lot in that process."

Different projects in different countries will need different solutions, he added: " "It's never exactly the same - it may be just sections of a larger project, or it could be just a pure floating LNG storage project," he said.

"Some are willing to agree to a fully integrated project, with power station and LNG offtake contract and guaranteed supply. In some areas there are existing power plants, but not enough gas. "SOCAR Trading" can source LNG for them".

Notably, the Delimara Gas and Power Energy Project in Malta is the first SOCAR Trading became involved in.

In this project SOCAR Trading is the supplier of LNG and owns 33% shares in Electrogas Malta. The first cargoes of LNG delivered to Malta in January this year.

A. Azimov said the company is competitive and flexible. "We can always take the cheapest LNG available on the market at any given time."

He noted that, SOCAR Trading was essentially open to offers when it comes to future LNG-to-power projects: "We would look at LNG and gas-fired power generation projects in places isolated from any existing grid or pipeline supply -- islands, or places with very regionalized consumption," he said.

"Greener power supply is becoming a priority in developing countries so countries that are short on power are falling under our strategy," he said.

Azimov said most LNG suppliers have their own production that is mostly tied up in long-term contracts.

"They have to balance their own LNG production with their own term supply deals and find homes for any excess LNG. But we are flexible and as such we will always be competitive," he said.

In Cote d'Ivoire, SOCAR Trading is part of a consortium that won a tender to operate an LNG-to-power project to boost the emerging West African country's economy. "SOCAR Trading will be responsible for its share of LNG supply to the terminal relative to our stake," Azimov said, adding that the more projects the company becomes involved in, the bigger its LNG portfolio becomes.

Notably, Total is operator with a 34% stake in the facility alongside national companies PetroCI (11%) and CI Energies (5%) as well as SOCAR Trading (26%), Shell (13%), Golar (6%) and Endeavor Energy (5%).

The project is due to start up in late 2018.

Other projects are currently at different stages of development - either with an MOU being prepared, due diligence being carried out or bilateral talks ongoing.Being 100%-state owned can also be an advantage, Azimov said

"Part of our strength too is that we are fully state-owned, that can work in our favor in certain situations," he said. For some countries, the aim to diversify gas import sources or power generation options is political.

"They use it as political leverage rather than as a pure commercial project. Some face political issues, and they might be looking for an alternative solution". In other countries, dealings are "purely commercial."

SOCAR Trading CEO added that, the company has no ambition to be a pure LNG trader. "We don't see the benefit in pure LNG trading - we don't have our own supply and we don't have customers we have to supply. Without those two shoulders we are more flexible, Though as we grow our portfolio - projects like Electrogas - we'll have more flexibility. We are looking at the future development of an LNG trading desk when we have a portfolio of different projects," he said.