Equinor Reports Up To $ 1.5 Billion In Gas Derivatives Loss In Fourth Quarter

The Equinor flag flies next to the company’s headquarters in Stavanger, Norway on December 5, 2019. REUTERS / Ints Kalnins / File Photo

OSLO, Jan. 11 (Reuters) – Equinor (EQNR.OL) will record a loss on gas derivatives of between $ 1.4 billion and $ 1.5 billion for the last quarter of 2021, in line with previous statements that certain third quarter profits would be reversed, the energy company said on Tuesday.

On October 27, Norway’s largest company announced an increase in profits from July to September, due to a global energy supply crisis that pushed natural gas prices in Europe to record highs and skyrocketed the value of derivative contracts.

But the company had simultaneously warned that this mark-to-market gas contracts would be followed by losses in the October-December quarter when volumes were delivered under long-term contracts at lower prices.

Equinor’s gas sales are primarily cash, but a portion of its long-term gas contracts are based on longer-term indices.

“The decision to take derivative positions has been beneficial for Equinor as a group,” the company reiterated in a statement Tuesday.

The Dutch TTF gas contract hit a record level of 186.25 euros per megawatt hour (MWh) on December 21, nearly ten times higher than prices of around 20 euros / MWh at the start of 2021. read more

Prices have since fallen to around 85 euros / MWh.

Reporting by Terje Solsvik, editing by Nora Buli

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