Germany’s Uniper Expects Higher Profits For 2023 After Successful Hedging

Germany’s energy major Uniper expects to book a higher profit for 2023 than previously anticipated thanks to hedging bets the company made for its power generation and natural gas distribution businesses.

Per a Bloomberg report citing the company, Uniper expects to book between $6.4 billion and $7.4 billion, or 6-7 billion euros, in earnings before interest, tax, and depreciation. The net figure is seen at between 4 and 5 billion euros, equal to some $4.24 billion to $5.3 billion.

Germany had to nationalize Uniper last year to avoid its collapse amid soaring gas prices and a lack of Russian supply in the wake of the Ukraine invasion and the EU sanction barrage. The total bill for the nationalization came in at $53 billion.

To replace lost Russian gas volumes, European buyers switched to U.S. LNG, with exports of the commodity from the U.S. Gulf Coast soaring to record highs last year. Uniper has been especially active on the spot market, uncertain about long-term gas demand in Europe.

"We want to continue to diversify geographically but also in terms of the duration of contracts," the company’s chief executive Michael Lewis said in July.

"The key challenge will be getting the right pricing and the right flexibility so that you can move that gas around easily, as demand starts to fall in Europe," he added at the time.

This month, meanwhile, three large European companies sealed long-term LNG supply deals that would guarantee deliveries of the fuel beyond 2050 despite the EU’s transition plans.

TotalEnergies, Shell, and Eni all signed contracts with Qatar Energy, under which deliveries will begin in 2026 with the contract term for all three deals at 27 years.

Uniper is currently working on enabling the German government to exit its majority shareholding. The approach it has employed is reducing its share capital by 97%.

By Charles Kennedy for Oilprice.com

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