Engie considers ruble gas payments

Engie has launched negotiations with Gazprom to "modify" the way it pays for Russian gas, in light of Russia's call for payments to be made in rubles rather than foreign currencies.

The Kremlin issued a decree on March 31 requiring gas buyers in "unfriendly" countries to transfer payments to accounts at Gazprombank. Here the funds will be converted and moved into a second, ruble-denominated account in the buyer's name, and then transferred to Gazprom.

Engie is prepared to execute "obligations" to the Russian giant, but only if they align with EU sanctions and avoid exacerbating its risk exposure, the French energy group said in its first quarter update May 16. Last year, roughly 20% of the company's global gas sales portfolio was sourced through Russian long-term agreements.

First quarter revenues at Engie rose by 85% yr/yr to €25.6bn. It has taken "several actions" to diversify and expand its gas supplies, while also adjusting its gas hedging positions. Core earnings before interest, taxes, depreciation and amortisation rose 49% to €4.6bn.

Engie has expanded its guidance range to reflect market volatility. Its indicative EBITDA range is now €11.7mn to €12.7mn, though it says net recurring income attributed to its group share increased to between €3.8bn and €4.4bn owing to the "strong" Q1 result and evolving commodity price assumptions.

Engie provided loans to Gazprom's Nord Stream 2 pipeline. It had €987mn in credit risk exposure to Nord Stream 2, likely written off when the project was indefinitely shelved in February, but there was no mention of an impairment in Engie's first quarter update.