EON’s gas arm posts $256mn profit in Q1
GERMAN utility EON’s merged gas and trading units swung to profit in the first quarter of this year, after big losses last year, the company announced on Wednesday.
It said the turnaround followed progress on gas contract talks and better handling of price fluctuations after the loss of its nuclear generation assets.
EON’s new Optimisation and Trading unit, which comprises wholesale trading across the fuels range, gas contracts, pipelines and storage, posted a 197 million-euro ($256 million) first-quarter profit after a 369-euro million loss a year ago.
This contributed to earnings before interest, tax, depreciation and amortisation of the group which rose overall by 9 percent year-onyear to around 3.8 billion euros in the first three months of 2012.
EON posted large gas trading losses of 700 million euros last year because of high global oil prices to which gas is index-linked and weak spot gas prices in Europe while EON remained tied into expensive pipeline contracts with Norway, Russia and other suppliers.
Separately, it clocked up energy trade losses of 1.84 billion euros in 2011. Its trading floor was caught out by buying power ahead since 2008 at high prices, which it needs to pay internally to EON’s power plants.
Wholesale prices dropped and EON lost two nuclear reactors under an enforced shutdown and it had to buy in extra power to meet delivery obligations for the two plants.
EON said these factors had been mitigated.
“Talks about adjusting gas procurement prices with some suppliers were partly successful,” it said. “This resulted in a significantly improved result compared to a year earlier.” EON has renegotiated gas purchasing contracts with Norway’s Statoil to reduce its loss position, bringing the total of renegotiated contracts to two thirds of the total.