Swiss gas, power trader MET eyes more physical assets in expansion drive
Switzerland-based gas and power trader MET Group is looking to expand through the acquisition of more physical assets, including those that provide synergies with its mainstay trading business, CEO Benjamin Lakatos said in an interview.
Source: S&P Global Platts
MET -- created in 2007 with an initial focus on the Hungarian gas market -- has expanded quickly since its foundation, becoming a pan-European trader and increasing revenues from Eur87 million in 2007 to Eur11.2 billion in 2020.
It has become well known as a key European gas trader, trading around 50-70 Bcm per year of gas, and is now looking to add more physical assets across the gas and power sectors to complement its trading strategy.
"We are looking at assets that are not a major focus of the current owner where we believe we can operate the asset more efficiently and/or create synergies with our existing, supporting positions on the market," Lakatos said.
MET could also add upstream gas assets to its portfolio. "I would be interested in physical gas production -- even outside of Europe -- provided I can bring it physically into my portfolio," he said.
The company's focus remains on having access to the entire the gas and power value chain.
"Our big picture approach is closer to the big integrated companies. Our sales activity and asset strategy provide options for monetization on the trading floor," he said.
In 2020, Singapore-listed Keppel Corporation bought a 20% stake in MET and the two companies also entered into a strategic partnership to explore joint investment opportunities.
"The intention of this investment is to go further in Europe and do acquisitions together," Lakatos said.
He said COVID-19 had slowed the companies' ambition in this respect, but that both sides remained "committed" to executing the European acquisition plan.
On European gas, Lakatos said the midstream gas market in Europe was heading for a phase of consolidation, which could present MET with acquisition opportunities.
"We like distressed assets. If a company is already working well, we are not the right owner," he said.
Its recent acquisition of a gas storage business in Germany was a good example of this, he said. "A gas storage asset has a higher value for MET with its trading capability than for other owners," he said.
"The same message is true for any assets with gas production or anything that consumes a lot of gas," he said.
As part of its strategy focus on assets -- one of three core activities along with trading and sales -- MET is looking to quickly grow its renewable generation business, which is a major growth sector in Europe given the European Green Deal and the "repositioning" of the energy industry.
"We are building a portfolio -- we want to have at least 500 MW owned capacity in central and eastern Europe," he said.
Its renewable division already includes assets such as wind generation in Bulgaria and the Dunai solar plant in Hungary.
In trading, Lakatos said MET's biggest focus was still gas. "We are already one of the big liquidity providers in Europe," he said.
When the European gas market was first liberalized and assets unbundled, gas trading margins were much bigger than now, with independent, nimble traders such as MET able to move quickly to make the most of trading opportunities.
Newer markets could also present opportunities to MET, he said, with some eastern European markets still without fully functioning markets.
He said Ukraine could be one such market. "I consider Ukraine, Turkey, Serbia and other eastern markets as opportunities, while some eastern EU countries also still have some way to go to be fully integrated into the European energy system."
MET has also grown its LNG trading business and has booked long-term LNG import capacity at the Croatia LNG import terminal, which started operations in 2021.
"We are trying to bring LNG to our European portfolio, not just in Croatia but everywhere," he said.
Lakatos said MET moved quickly to recognize that the "mathematics" had changed around LNG prices when it booked capacity at Croatia LNG. "There was a moment on the market where supply made sense and we took the opportunity," he said.
In the long term, he said LNG would remain a competitive source of gas for Europe. "Europe will be a gas demand manager of the global balance. You can always dump surplus gas in Europe."
The well developed European gas market meant Europe could also act as one of the main price setters for gas globally, he said.