Global Energy Ventures (ASX:GEV) compressed natural gas developer


by Jessica Amir

Global Energy Ventures Limited (ASX:GEV) CEO & Executive Chairman, Maurice Brand talks about the market for compressed natural gas (CNG), approval for the company's CNG ship design from the American Bureau of Shipping, strategy and outlook.

Jessica Amir:
Thanks for your company, I’m Jessica for the Finance News Network and with me today from Global Energy Ventures Limited or GEV (ASX:GEV) is Executive Chairman, Maurice Brand. Maurice, welcome to the Network.

Maurice Brand: Good afternoon, my pleasure.

Jessica Amir: First up, for those who are unfamiliar with Global Energy Ventures or GEV. Just give us an introduction.

Maurice Brand: Global Energy Ventures or GEV has been set up to develop a new arrangement, whereby we can transport gas from one country to another country, as compressed natural gas. Traditionally you move gas by a pipeline, or perhaps by liquefied natural gas. There hasn’t been the opportunity to commercially transport gas in a cheaper form, over shorter distances, or in stranded regions of the world, unless we had this new technology and new design, which has now been fully approved.

Jessica Amir: Now let’s dive into the details a little more. Just tell us about your CNG Optimum design?

Maurice Brand: This is the key and the core intellectual property that the company has. The result of over $US60 million that’s been spent over nearly 30 years, in coming up in a way the designer ship to move the gas, economically over shorter distances. It’ll never replace LNG; we’re not trying to do that. But there’re a lot of applications around the world, where gas is actually stranded. Or guys that are producing oil for example, that are constrained, because they can’t work out a commercial solution to deal with their gas. So really it’s like a floating pipeline at the end of the day.

Jessica Amir: Now can you tell us about your customers?

Maurice Brand: We’ve already announced a couple of customers that we’re working with globally. The first customer is Uniper, which is a very large European gas company that trade and we’re looking to take gas into the UK, through a port called Port Meridian. Another customer is the Indian Oil Corporation, where we signed a 20-yearheads of agreement, a very large $70 million corporation in India. India is short of gas; they need more gas, so how do we supply them with more gas?

And so the market for us is to get that gas in the Middle East. And we’re working with the five countries in the Middle East that have gas, knowing that we’ve got a customer at the end of the chain. Similar opportunities exist for instance around Australasia, both in Malaysia, PNG, Australia and elsewhere. So we’re quite busy at the moment. We’ve announced four opportunities, but there are six others that are quite advanced. So we have 10 and frankly, we just need to get one of those fully signed off and to financial close. And our goal is to complete that this year.

Jessica Amir: So a lot of opportunity, but what can you tell us about the supply?

Maurice Brand: It’s difficult to jump straight out of coal or oil into renewables, for a lot of reasons. So the transition fuel that most believe is going to become quite dominant, is in fact gas. So then the question is how do you get the gas from a country that’s oversupplied with gas and doesn’t have enough domestic demand, to a country that is undersupplied with gas, but has huge demand. So globally there’s a growth in the next 12 years predicted of around about, up to 200 million tonnes of LNG equivalent, which is like nearly double, the global LNG market at the moment. So some of that will be supplied by pipeline. Some will be supplied by LNG and some will be supplied by our method of compressed natural gas.

Jessica Amir: What can you tell us about your finances?

Maurice Brand: We raised some $4.7 million earlier this year. So that topped up our requirements for our working capital for 2019. So we have sufficient funds to rollout our business plan and to implement a project. Obviously when we come to a project, we’ve got to arrange finance for the ships, but think of the ship as a plane. So Qantas for example probably leases all their planes. So they don’t actually have to fund them, they have a lease arrangement. So the shipping industry is very similar. People will finance 100 per cent of the ship against the long-term contract.

So the financing plan really Jessica, comes back to the quality of the buyer. So if you get an AAA-grade credit rating buyer, or a large oil company to buy a large gas company, they actually have the balance sheet to meet their obligations, to pay you when you deliver your gas. So that is what you fund against. So it’s wrong for people to look at our balance sheet, which is obviously modest, because we’re a small company. And look at the balance sheet of the customers that we announced, that we would wish to enter into long-term contracts to sell into.

These contracts are typically up to 20 years. So it gives you a long-term stable cash flow and ultimately that’ll come out of dividends. But the value for shareholders at the moment is as we meet each of our milestones, then obviously we rerate the shares.

Jessica Amir: Moving to that rerating. What can you tell us about the GEV share price over the past 12 months?

Maurice Brand: So we’re very happy with our financial position. Our quality of our shareholders I think, speaks well and the fact that we’ve stabilised our share price. Now the challenge is for us to meet further milestones as quickly as we can, and to rerate the stock as we move forward into gas production, later on.

Jessica Amir: Just lastly Maurice. Is there anything you’d like to add?

Maurice Brand: I think certainly we’re very confident we can deliver. So all the directors have invested their own money in the company. All the people that we’ve involved, both consultants and staff have invested in the company with their own monies, own funds. So there is a strong commitment, there is a strong work ethic. Everybody’s just focused on delivering what we need to do. And we really want to achieve that goal this year, of getting to a financial close for a project.

Jessica Amir: Thank you so much for your time, I really appreciate it, Maurice Brand.

Maurice Brand: Thank you.