Russia’s Novatek Struggles to Trade Europe Gas on Ukraine Recoil
Russia’s Novatek Struggles to Trade Europe Gas on Ukraine Recoil
(Bloomberg) -- Novatek PJSC, Russia’s largest independent natural gas producer, is grappling with a slowdown in business in Europe following the invasion of Ukraine that threatens its spot market trading desk in Switzerland.
Novatek Gas & Power, a unit of the Russian firm, is struggling to attract business in European gas hubs as clients and peers cut business ties, according to three people with knowledge of the matter who requested anonymity to discuss private details. The company is also unable to find new traders to replace recent departures, which may ultimately result in the desk temporarily halting operations or closing altogether, the people said.
The backlash against Novatek comes even though the company, or the fuel it trades, isn’t directly under Western sanctions. Novatek Chief Executive Officer Leonid Mikhelson was targeted with sanctions in April by the U.K. and Canada.
Traders and utilities are fleeing exposure to Russia in response to the war in Ukraine amid fears that governments may eventually target natural gas.
While Novatek’s trading volume in European gas hubs has dropped, the desk is still operating, the people said. The company plans to continue proprietary trading liquefied natural gas and oil products in Zug, Switzerland, according to the people. Novatek became Russia’s top LNG exporter and a leading supplier to Europe after the startup of its Yamal export plant in 2017.
Novatek didn’t respond to Bloomberg request for a comment sent Wednesday morning.
Novatek started trading on the NetConnect Germany hub in 2012 after signing a deal to supply the fuel to a German utility and the next year expanded to the Title Transfer Facility in the Netherlands, the region’s biggest market. It incorporated in the U.K. from 2015.
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