Competition will intensify on the Czech energy market, especially in the segment of wholesale gas sales to industrial enterprises. At the end of the year, MET Group, a European energy giant based in Switzerland, entered the Czech Republic and has the power to influence domestic energy prices.
Original article in Czech: Forbes
Information about the entry of the Swiss colossus into the Czech market began to leak unnoticed by the media in early December. For example, on the website of the Czech Energy Market Operator (OTE), where every entity wishing to trade energy in the Czech Republic must register.
"A new electricity and gas settlement entity, MET Czech Republic, has been registered in the OTE central system with effect from 1 December 2024, with access to the short-term electricity and gas markets organised by OTE," the authority said on its website on 2 December last year.
The Commercial Register shows that MET Czech Republic was founded by its Swiss owner, MET Sales and Trading Holding AG, part of the MET Group, in October. Since then, a website for the new Czech branch has been created, as well as information on Wikipedia about MET Group' s activities not only in the Czech Republic but also worldwide.
"We are delighted that MET Group, a leading European player in the energy markets, is bringing new energy to customers in the Czech Republic and the entire Central European region," says MET Czech Republic CEO Pavel Balada on the company's website.
A native Czech with experience from KPMG, he joined MET Group ten years ago, when he moved to Zurich. He has gradually worked his way up to become the head of a new Czech entity that is now entering the Czech market. He will share more details on Wednesday, when the company has scheduled a press conference.
MET Group is generally unknown to the Czechs. It is mainly known to people in the industry, mostly natural gas wholesalers. It is better known to our neighbours, such as Poland and Slovakia, where it has been active since 2010. MET Group is really no pushover. It is active in fifteen countries in Europe, has an office in Singapore, employs over a thousand people and, according to its most recently published annual figures, its revenues reached 24.5 billion euros, roughly 620 billion Crowns, in 2023. By comparison, CEZ's revenues were half that at the time.
The Swiss group, which is co-owned by Singapore-listed Keppel Corporation, operates in 30 national gas markets and traded 88 billion cubic meters of the commodity in 2023. The country's annual gas consumption is less than seven billion cubic metres. MET Group also traded 68 megawatt hours of electricity.
In addition, it is also involved in renewables. It has photovoltaic and wind power plants with a total capacity of 380 megawatts in Spain, Germany, Poland, Hungary and the Balkans, with an additional 800 megawatts under construction.
The group, which has LNG trading at its core (it has brought more than thirty LNG carriers to Europe), has chosen a good time to enter the Czech market.
Since the New Year, gas has stopped flowing from the east via Ukraine due to expiring contracts, leaving the Czech Republic dependent only on the western route via Germany. And through those pipelines we get gas not only from Norway, but also from LNG terminals on the Baltic Sea.
One of them is Eemshaven, a third of its capacity is leased by the Czech Republic through CEZ. The capacities of the terminal are also shared by the multinational companies Engie and Shell.
Last year, MET Group signed a ten-year contract with the latter company for the purchase of US LNG. The liquid gas from CEZ and Shell, and thus MET Group, destined for the Czech Republic can meet at the regasification facility in Eemshaven. This will increase the importance of this terminal for our country.
Gas will then play an important role in the Czech energy sector at a time when coal-fired power plants are shutting down. It should, at least temporarily, cover the new demand that will be created by converting coal-fired boilers. This also applies to heating plants, which are also now being converted to gas. Domestic demand for gas will therefore grow.
The question remains - what impact the entry of a new trader will have on energy prices in the Czech Republic? Due to its nature (the need for liquefaction and then regasification) and transport from other continents, LNG is usually more expensive than the pipeline gas to which we are accustomed.
On the other hand, MET Group can benefit from economies of scale and can also be expected to undercut prices in the initial market capture phase. Since it supplies gas mainly to industry, lower prices should later be reflected in the economy in the form of lower inflationary pressure, i.e. upward pressure on the prices of goods and services.