Germany’s EnBW says Sefe settlement cuts negative impact on profit
By Ludwig Burger
FRANKFURT (Reuters) -German utility EnBW said a settlement between its VNG subsidiary and gas supplier Sefe, formerly known as Gazprom Germania, over insufficient gas supplies from Russia meant that the burden on full-year earnings was much less than feared.
The negative earnings impact for 2022 will likely be below 1.3 billion euros ($1.3 billion), an upper limit mentioned in its second-quarter report, but above 545 million euros, EnBW said in a statement on Monday.
Germany is scrambling for gas after Russia cut supplies to Europe, ending the country’s longstanding energy relationship with Moscow, which once supplied most of the gas to Europe’s top economy.
Gas import company Gazprom Germania, now Sefe, was dropped by Russia’s Gazprom earlier this year and put under German state trusteeship to avoid the collapse of the company.
EnBW’s VNG relies on Sefe for 65 terawatt hours (TWh) of gas supplies, accounting for much of its gas procurement needs.
The two companies have been in a legal dispute over how to split the burden of having to purchase much more expensive volumes on the global market to replace the Russian gas.
As a result of this, Germany’s largest gas importers – Uniper, Sefe and VNG – have either been bailed out or requested state aid to stay afloat.
People familiar with the matter told Reuters last week that Germany was in advanced talks to provide billions of euros in additional guarantees so that Sefe can honour the 65 TWh contract with VNG.
EnBW said in the statement on Monday that Sefe had settled out of court with VNG, agreeing to bear the extra costs of gas replacement purchases in 2022 and to refund the financial impact of replacement procurement borne by VNG under the contract.
VNG said, however, that it continues to incur losses on a 35 TWh contract directly with Gazprom, adding it remained in talks with the German government over compensation.
“The precise shape of the solution for offsetting the costs of replacement procurement for VNG now has to be clarified as quickly as possible in talks with the government,” VNG CEO Ulf Heitmueller said.
“We need a swift, economically viable solution so that we can steer back into calmer waters.”
More specific effects on EnBW’s finances and cash flows depend on further talks with the German government, the utility added.
($1 = 1.0310 euro)
(Reporting by Ludwig Burger in Frankfurt; Additional reporting by Christoph Steitz; Editing by Jan Harvey and Matthew Lewis)