COPENHAGEN, Dec 21 (Reuters) by Stine Jacobsen – Energy trader Danske Commodities has received a 3.5 billion euro ($3.7 billion) capital injection from parent company Equinor (EQNR.OL) to boost liquidity and fund growth as it contends with highly volatile energy markets.
Soaring energy prices and extreme market volatility have forced multiple European utilities and traders to secure extra funds to cover margin call requirements.
“When prices go up, so does the size of margin calls on the energy exchanges,” Danske Commodities’ finance chief Jakob Sorensen said in a statement.
“Trading companies … must post collateral to cover potential price fluctuations in the period from when a trade is struck to when the energy is actually delivered.”
Danske Commodities, which posted a six-fold rise in 2021 operating profits to record levels, told Reuters it expected another record year for 2022 and aimed to continue to grow its business.
“As such, the capital injection underlines our growth ambitions, the synergies we gain from being part of Equinor and our commitment to contributing to functioning energy markets,” it said in a written comment.
Equinor’s gas and power chief Helge Haugane, who also chairs Danske Commodities, said he was pleased with Danske’s performance.
“We are glad to make this capital injection to further strengthen Danske Commodities’ position in a market environment which requires a high degree of solidity and liquidity to function as well as to prepare for continued growth,” he said in the statement.
Danske, which trades in 40 markets worldwide, said in September it had secured extra funds from Equinor at a time when margin calls soared to record highs in Europe.
Equinor, majority owned by the Norwegian state, has become Europe’s largest supplier of natural gas, giving it record profits after a sharp drop in pipeline volumes from Russia’s Gazprom (GAZP.MM) since the start of the Ukraine war.
European gas importers have so far been the biggest corporate victims of the energy crisis, with Germany’s Uniper (UN01.DE) costing the government more than 50 billion euros to date and facing de facto nationalisation.
Reporting by Stine Jacobsen Editing by David Goodman and Mark Potter
(c) Thompson Reuters