Trafigura Signs $3 Billion German-Backed Loan for Gas Supply

By Bloomberg

Dec 05, 2022

image is BloomburgMedia_RMEOBTDWRGG501_05-12-2022_11-00-20_638057952000000000.jpg

Photographer Imke Lass/Bloomberg Photographer: Imke Lass/Bloomberg

Commodities trader Trafigura Group signed a $3 billion German government-backed loan for gas supply, as Berlin steps up efforts to secure natural resources following Russia’s invasion of Ukraine.

Trafigura, which will primarily tap its global gas and liquefied natural gas portfolio, made the first delivery on Nov. 1, the trading house said Monday in a statement. The loan deal confirms an earlier report by Bloomberg News.

It’s the second such deal in recent months, after Trafigura in October announced it had secured an $800 million loan to supply metals to Germany. Increasingly, trading companies that have historically been major off-takers of Russian energy, grains and metals are now being tapped by governments to find alternatives from international markets.

Germany has had to retool its energy policy since the war in Ukraine forced it to end a longstanding dependence on cheap Russian gas. Chancellor Olaf Scholz has traveled to Saudi Arabia and Qatar seeking energy deals, and last week Qatar announced a long-term agreement to supply Germany with LNG starting in 2026. The nation used to get more than a half of its gas via pipelines from Russia.

The country is becoming increasingly concerned about supplies of other critical materials like metals that underpin technologies needed for the transition away from fossil fuels. The government is considering a state-backed fund to help find alternative suppliers to China, an initiative spearheaded by Economy Minister Robert Habeck.

Germany is offering backing for commodity traders through a program known as untied loan guarantees, managed via Euler Hermes AG -- an export-credit unit that’s now part of Allianz SE. The guarantees insure the majority but not all of the loans and were originally for encouraging Germany’s manufacturing exports.

The four-year loan with Trafigura for gas supplies was jointly arranged and underwritten by Deutsche Bank AG and another bank, and syndicated to more than 25 other lenders.

For trading houses like Trafigura, the deals represent a key means of obtaining financing at a time when high commodity prices and extreme volatility have increased their need for credit and have left some banks reluctant to add exposure to the sector. 

The loan means Trafigura has committed to delivering “substantial volumes of gas into the European gas grid, and ultimately into Germany, over the next four years,” according to the statement. Trafigura will supply the gas to SEFE Securing Energy for Europe GmbH, a former unit of Gazprom PJSC that was recently nationalized by the German government. 

We are supplying a “significant volume of gas to Germany backed by our extensive portfolio and long term US LNG contracts,” said Richard Holtum, head of gas and power trading for Trafigura.

Read: Germany Backstops Commodity Traders as War Drives Resource Dash

(Updates with Trafigura gas commitment in penultimate paragraph)

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©2022 Bloomberg L.P.

By Archie Hunter , Steven Arons


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