Equinor injects $3.7 billion into its energy trading business

By Stine Jacobsen

COPENHAGEN -Power dealer Danske Commodities has acquired a 3.5 billion euro ($3.7 billion) capital injection from mum or dad firm Equinor to spice up liquidity and fund progress because it contends with extremely unstable power markets.

Hovering power costs and excessive market volatility have compelled a number of European utilities and merchants to safe additional funds to cowl margin name necessities.

“When costs go up, so does the scale of margin calls on the power exchanges,” Danske Commodities’ finance chief Jakob Sorensen stated in an announcement.

“Buying and selling firms … should publish collateral to cowl potential value fluctuations within the interval from when a commerce is struck to when the power is definitely delivered.”

Danske Commodities, which posted a six-fold rise in 2021 working earnings to document ranges, instructed Reuters it anticipated one other document yr for 2022 and aimed to proceed to develop its enterprise.

“As such, the capital injection underlines our progress ambitions, the synergies we acquire from being a part of Equinor and our dedication to contributing to functioning power markets,” it stated in a written remark.

Equinor’s fuel and energy chief Helge Haugane, who additionally chairs Danske Commodities, stated he was happy with Danske’s efficiency.

“We're glad to make this capital injection to additional strengthen Danske Commodities’ place in a market surroundings which requires a excessive diploma of solidity and liquidity to perform in addition to to arrange for continued progress,” he stated within the assertion.

Danske, which trades in 40 markets worldwide, stated in September it had secured additional funds from Equinor at a time when margin calls soared to document highs in Europe.

Equinor, majority owned by the Norwegian state, has change into Europe’s largest provider of pure fuel, giving it document earnings after a pointy drop in pipeline volumes from Russia’s Gazprom because the begin of the Ukraine conflict.

European fuel importers have to this point been the largest company victims of the power disaster, with Germany’s Uniper costing the federal government greater than 50 billion euros up to now and going through de facto nationalisation.

($1 = 0.9425 euros)