New Uniper chief not happy with US LNG contracts duration

German utility Uniper’s new chief executive Michael Lewis has argued for more flexible liquefied natural gas terms, warning of a possible stalemate between major US LNG exporters and premium buyers in Europe.

Shorter-duration contracts for LNG purchases will be important for Europe’s diversifying supply given uncertainty about long-term gas demand, Lewis told the LNG2023 conference in Vancouver, Canada, on Monday, reported Reuters.

Lewis, who took the reins at Uniper on 1 June, said LNG developers prefer 20 to 25-year contracts to help secure financing for multibillion-dollar projects, but customers in European nations committed to moving to renewable fuels within the next 20 years have been reluctant to sign such deals.

The role of LNG in Europe’s energy mix is reasonably secure until 2030 but, after that, it is “very, very, challenging” to predict gas demand as countries ramp up decarbonisation efforts, he said.

“We want to continue to diversify geographically but also in terms of the duration of contracts,” Lewis was quote as saying by Reuters.

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“The key challenge will be getting the right pricing and the right flexibility so that you can move that gas around easily, as demand starts to fall in Europe.”

Uniper is seeking to secure new energy supplies, while it battles with major financial losses after Russian pipeline gas supplies were cut following Russia’s invasion of Ukraine early last year.

The company posted a record loss of €19.1 billion ($20.3 billion) for 2022 as it attempted to replace the Russian volumes.

As the German company’s financial position deteriorated through 2022, Uniper turned to the government for help and agreed a nationalisation deal last September.

This was followed by shareholders during an extraordinary general meeting in December 2022 approving capital measures to stabilise the company.

In the wake of Uniper’s financial woes, former chief executive Klaus-Dieter Maubach was dismissed on 1 June.

New chief execurive Lewis has almost 30 years’ experience in the energy sector with a special focus on renewable energy.

He started his career in 1993 at Powergen in the UK. Since 2007, he has held various positions at German energy company E.ON, including head of climate and renewables, and since 2017 head of E.ON UK, said Uniper.