Dynagas LNG Partners, a master limited partnership with considerable exposure to business in Russia, said it was in compliance so far with all US and European sanctions levelled against the country over the Ukraine war.
Counterparties were “currently performing their obligations under their respective time charters” in line with US and European Union (EU) rules and regulations, compliance with applicable US and EU rules and regulations, the company said in a quarterly earnings statement late on Thursday.
US-listed Dynagas LNG Partners warned, however, that sanctions legislation is evolving constantly and that it couldn’t “provide any assurance” that it might not eventually “have a significant impact on its business, financial condition or results of operations”.
“We continue to closely monitor this ongoing situation, including the implications of economic sanctions, trading restrictions and other considerations that may affect our business,” said the company’s chief executive officer Tony Lauritzen.
Five of the six large LNG carriers owned by Dynagas LNG Partners are on long-term charters involving Russian companies or projects.
The 149,700-cbm Clean Energy and Ob River (both built 2007), as well as sistership Amur River (built 2008), are employed between 2026 and 2028 by Russian state natural gas giant Gazprom.
The 155,000-cbm Yenisei River and Lena River (both built 2013) are on charters lasting for at least another 11 years at the Yamal LNG project — an LNG production terminal on the Yamal peninsula in northern Russia.
Yamal is a joint venture controlled by Russia’s Novatek, which includes minority partners Total E&P Yamal, the China National Oil & Gas Exploration and Development Corporation (CNODC) and Cyprus-based Yaym Limited.
In response to Russia’s invasion of Ukraine late last month, the US has banned all energy imports from Russia. Such business is still legal in the European Union (EU) but the 27-nation bloc has said it would try to wean itself off Russian energy eventually, and imposed financial restrictions on a number of Russian companies.
Potential pitfalls
Limiting or banning several Russian banks from using SWIFT, a cross-border payment system, could “negatively affect payments” under its existing charters, Dynagas LNG Partners said.
Counterparties could be potentially limited from performing under their agreements, the company added. Furthermore, Dynagas LNG Partners said that it could itself face “greater difficulties raising capital in the future”.
The company reported that net income rose by 59% year-on-year in the fourth quarter of 2021, to $16.9m.
The result was driven by steady income from its long-term charters and a $5.5m financial gain from derivative instruments.
For the full year of 2021, Dynagas LNG Partners’ profit jumped by 56% to $53.3m, on broadly flat revenue of $137.7m.
The company said it plans to “reinforce liquidity to build equity value over time and enhance… [its] ability to pursue further growth initiatives”.
