27 Oct 2021 17:51

Novatek, Fluxys disbanding JV for LNG terminal project in Germany

MOSCOW. Oct 27 (Interfax) - Novatek and Belgium's Fluxys and disbanding a joint venture that was set up to build a medium-tonnage liquefied gas terminal in Rostock, Germany, Novtek said in an earnings report.

"As at December 31, 2020, the Group held a 49% ownership interest in Rostock LNG GmbH, its joint venture with Fluxys Germany Holding GmbH. In September 2021, shareholders made a decision to liquidate Rostock LNG GmbH," Novtek said.

Sources familiar with the situation told Interfax at the end of September that Novatek and Fluxys had abandoned the project. "Fluxys and Novatek have unfortunately decided not to continue the joint project to construct and operate a medium-tonnage terminal at the port of Rostock," Fluxys told Interfax at the time. "Despite the constructive support of all of the project's stakeholders, the current market conditions have turned out to be overly complicated for implementing the project," the Belgian company said.

Rostock LNG GmbH, a joint venture between Novatek, 49%, and Fluxys, 51%, signed an agreement in October 2018 with the administration of the port of Rostock on leasing a plot of land in order to construct a medium-capacity LNG terminal. Rostock LNG GmbH planned to build a terminal with capacity of 300,000 tonnes per year as early as 2022.

The terminal would have received ships with LNG, including those manufactured by Novatek's LNG plant at the port of Vysotsk, Cryogas-Vysotsk, and subsequently sell products in tank trucks to the market. The terminal was also envisaged to provide for the possibility of bunkering ships and the transshipment of LNG to bunker barges.

Cryogas-Vysotsk, which is a JV with Gazprombank , has started to generate profit but most of this is so far going towards covering losses for past years. "For the nine months ended September 30, 2021, the group's share of profit in LLC Cryogas-Vysotsk amounted to 2.883 billion rubles, of which 2.483 billion rubles were not recognized in the consolidated statement of income as were offset against the previously unrecognized share of losses," Novatek said in the report.