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France's Engie to continue Russian gas purchases on energy market 'tensions'

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France's Engie to continue Russian gas purchases on energy market 'tensions'

Highlights

Warns of 'significant' supply tensions if sanctions hit Russian gas

Long-term contracts with Gazprom account for 20% of Engie sales

Engie seizes 'all opportunities' to ensure supply security

  • Author
  • Stuart Elliott
  • Editor
  • Kshitiz Goliya
  • Commodity
  • Natural Gas
  • Tags
  • United States
  • Topic
  • Europe Energy Price Crisis War in Ukraine

France's Engie signaled late March 2 that it would continue to buy Russian gas, saying its priority was to ensure gas supply security for its customers.

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Engie's long-term contracts with Russia's state-controlled Gazprom represented around 20% of the company's overall gas sales in 2021, it said in a statement.

"At a time when there are increasing tensions in energy markets, Engie will continue to prioritize the security of energy supply to its clients," it said.

Engie said it would comply with any European sanctions that could potentially affect Russian gas supplies to Europe, but warned of the major impact such a move would have on the market.

"Should European sanctions affect Russian supplies –- which account for 40% of all European gas needs across all operators -- Engie would comply with such decision at all levels," it said.

"Under these exceptional circumstances, governments and regulatory authorities would have to take measures given significant supply tensions that could be expected for 2022/2023 and the group would work hand-in-hand with authorities."

France bought a total of 12.4 Bcm of Russian gas from Gazprom in 2020 -- according to the most recent full-year sales data from the Russian company -- or around 29% of French gas consumption that year.

Engie said it had a portfolio of long-term contracts with a number of other non-Russian gas suppliers, including Norway, the Netherlands, Algeria and the US.

"The group is seizing all possible opportunities to ensure security of supply," it said.

Nord Stream 2 role

Engie said it did not engage in any industrial activity in Russia and no investment projects were underway on Russian territory.

However, Engie was one of five European energy companies that helped finance the construction of the suspended Nord Stream 2 gas pipeline from Russia to Germany.

"Engie, as a lender, is exposed to Eur987million of credit risk which could impact its accounts in the event of Nord Stream 2 filing for insolvency," it said.

The Switzerland-based operator of Nord Stream 2 on March 2 denied reports it had filed for bankruptcy, saying it had only informed local authorities that it had terminated employee contracts.

Numerous media reports, citing sources and Swiss officials, on March 1 said Nord Stream 2 AG had filed for insolvency or was planning to after US sanctions were imposed against the company on Feb. 23.

Engie, along with Shell, Austria's OMV, and Germany's Wintershall Dea and Uniper, each pledged to loan Eur950 million to help build Nord Stream 2.

Shell on Feb. 28 said it intended to end its involvement in Nord Stream 2, while OMV said March 1 it would review its role in the project.

Wintershall Dea said March 2 it had written off its investments in Nord Stream 2 totaling Eur1 billion.

Learn more about the history of the Nord Stream 2 project: