The energy company MET is experiencing impressive growth, investing in renewable energies and continuing to invest in the gas market. However, shadows from the past are holding back the Swiss group.
Source: Neue Zürcher Zeitung
The companies of Achema produce nitrogen fertilizers, extract and sell natural gas, set up wind farms, operate hotels, repair ships, and are involved in the radio business. The Lithuanian group is an old-school conglomerate.
Achema is also one of the largest private companies in Lithuania. The founder and long-time company head, Bronislovas Lubys, was once the Prime Minister and the richest man in the Baltic state. Lubys died in 2011. His widow, Lyda Lubiené, and daughter, Viktorija Lubyté, now together hold a majority stake of 54.07 percent in the group.
Major Investor in the Baltics
According to Benjamin Lakatos, this majority stake could soon move to the Swiss energy trader and producer MET Group. “There is trust and respect between us and the two shareholders. We want to make the deal,” says the MET CEO in his office in Baar, Canton of Zug.
So far, there is interest but no binding agreement. The financial and legal situation of the Lithuanian company will first be examined, and then the authorities would have to approve such a transaction. Legally, the situation is complicated, says Lakatos. Additionally, one of the minority shareholders has exercised their right of first refusal.
If the deal goes through, MET Group would suddenly become one of the most important foreign investors in Lithuania. The announcement of a possible takeover has already caused a stir in the Baltic state. The past of the commodity trader has also been brought up, which has roots in Hungary and is associated with the entourage of Hungarian Prime Minister Viktor Orbán as well as Russian stakeholders.
In Switzerland, however, MET Group is one of those companies that trade in commodities, generate huge revenues, but are little known to the public. The trader benefited from the rising energy prices of recent years. In 2023, the company achieved a turnover of 24.5 billion euros, the second-best result in the company’s history. In 2022, it was 41.5 billion euros.
The company does not publish further financial figures; these are baby steps towards transparency. According to Lakatos, the company has financial resources in the billions. The past few years have been highly successful.
The company trades in pipeline natural gas, liquefied natural gas (LNG), and electricity. Although MET is increasingly investing in electricity production from renewable energies, the majority of the company’s revenues and profits come from fossil fuels. Through subsidiaries, MET is present in 15 countries and operates on 30 national gas markets.
“Natural Gas is No Longer Sexy”
It is an unusual step for an energy company to invest in fertilizer production. This can be explained by the fact that nitrogen fertilizers are largely produced using natural gas. Gas costs make up about 70 percent of the total costs of production.
At the same time, Lakatos says, “Natural gas is no longer sexy in the eyes of investors.” However, it remains an important fuel for the global energy transition. Many have lost focus on gas, but natural gas will be needed for longer than expected. MET’s investment strategy is: consolidation of the full value chain.
“Anything that produces, stores, transports, or consumes gas in large quantities is of interest to us. We can then leverage our trading expertise,” says Lakatos. This could work like this: when natural gas prices are high, less fertilizer is produced, and vice versa. Lakatos is also interested in other fertilizer producers in Europe, and MET wants to establish a department for trading fertilizers.
The plant in Lithuania could benefit from MET’s extensive network. Achema has another advantage: the group is involved in KN Energies, the operator of the LNG terminal in Klaipeda, Lithuania – a further trading opportunity.
However, European fertilizer manufacturers have been severely hit over the past two years. Achema reports that it incurred a loss of 47 million euros last year from nitrogen fertilizer production. The plant ceased operations for some time from September 2022 due to rising natural gas prices. After the Russian invasion of Ukraine, Achema stopped purchasing gas from Russia, which resulted in a loss of competitiveness. Fertilizer from the USA, Turkey, Egypt, and Russia has become cheaper.
In order to continue fertilizer production in Europe, Lakatos sees three requirements: legislative support, efficient use of technology, and competitive natural gas prices. MET can contribute to the latter. The commodity trader emphasizes that the company now only trades extremely small quantities of Russian gas.
A strategic company
Russia, however, is the focal point of the discussion in Lithuania. The Baltic states are among the most vehement warners against the imperial ambitions of the Kremlin. The LNG terminal in Klaipeda is the country’s insurance against dependence on Russian gas. Therefore, it is of national importance who owns it.
When the first rumours of MET’s potential acquisition of Achema surfaced, Parliament spokeswoman Viktorija Čmilytė-Nielsen stated that due to the company’s possible connections with the Hungarian government, additional caution was necessary.
The sale of strategically important companies must be approved by a state commission. Meanwhile, MET has launched a charm offensive: to present its point of view, the MET CEO recently invited three journalists from the most prominent Lithuanian media to Baar.
“Unlike many other energy companies, MET is completely independent, we have no political interests,” Lakatos responds to the accusations. Currently, Lakatos holds more than 70 percent of MET, with the management owning close to 20 percent and the infrastructure company Keppel from Singapore owning 10 percent. In 2018, the management, under Lakatos, acquired the company, making him the majority shareholder since then.
Russian Investors and Orban’s Entourage
MET stands for MOL Energy Trading and was founded in 2007 as the trading arm of the Hungarian semi-state energy conglomerate MOL. The idea came from Lakatos, who worked at MOL. While the conglomerate only invested 100,000 euros in the company, the name was important for business dealings with other natural gas firms. MET capitalized on the new business opportunities brought by the liberalization of European gas markets faster than many others.
Two years after its founding, Normeston invested in MET - according to Lakatos, it was an oil trader who also conducted business with MOL. Media reports suggested that Russian interests were involved. The hope was that Normeston would bring a large natural gas supply contract “from the East”, meaning from Russia or other former Soviet republics. At that time, this would have been a significant advantage in the market.
However, the contract never materialized, says Lakatos. MET shifted its focus to dealings with European gas companies. Normeston later sold its shares partially to Hungarian and partially to Russian investors. Among them were individuals associated with the orbit of the Hungarian Prime Minister.
Subsequent transactions took place; Lakatos says he only found out about some of them through the media. The management felt uncomfortable with the changes of ownership, in which they were not involved, which led to his purchase of the company.
Lakatos has answers to the questions about his past that seem plausible. One reason for moving to Switzerland with MET was also to gain greater independence. “The energy industry is too big, too influential, and too close to politics in many countries,” says Lakatos. He wanted to distance himself from that: “Without the move to Switzerland, we would hardly have been able to achieve our current independence.”
However, there is still a connection: MET’s longtime former chairman of the board of directors, Csaba Lantos, joined Viktor Orbán’s government as Minister of Energy in 2022. Lakatos says that he has created a home for energy experts with the trading company.
This is also evident in the fact that Lantos was appointed as minister. However, the connection between Lantos and Orbán dates back long before the founding of MET, says Lakatos: “They are from the same generation and have known each other for many decades.”