- Europe Power Firms Need $1.5 Trillion Euros in Margin Calls, Equinor Says
by Marwa Rashad, https://www.reuters.com/
- Margin calls in Europe exceed 1.5 trillion euros – Equinor exec
- Seen squeezing market liquidity – Equinor’s Haugane
- Demand reduction only feasible fix to crisis -Haugane
LONDON, Sept 6 (Reuters) – European energy companies need at least 1.5 trillion euros ($1.5 trillion) to cover the cost of their exposure to soaring gas prices, Norwegian energy group Equinor has estimated, and that does not include firms in Britain.
Several European countries are providing billions of euros in support to power suppliers caught out by extra collateral payments on their trades – known as margin calls – but Equinor’s estimate suggests such support is a fraction of the overall bill.
Utilities often sell power in advance to secure a certain price, but must maintain a “minimum margin” deposit in case of default before they supply the power. This has raced higher with soaring energy prices triggered mainly by Russia slashing gas supplies to Europe, leaving firms struggling to find cash.
Helge Haugane, Equinor’s senior vice president for gas and power, told Reuters that in Europe excluding Britain, the total of such margin calls was probably more than 1.5 trillion euros, squeezing market liquidity and leaving a number of small- and medium-sized firms struggling.