E.ON trading unit to seek U.S., Asia growth

Wed Apr 17, 2013 12:09pm EDT

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By Vera Eckert

DUESSELDORF, Germany, April 17 (Reuters) - German utility E.ON SE will seek more energy trading opportunities out of the United States and Asia from its soon-to-be created Merchant Trading unit, aiming for growth in an increasingly globalised sector.

"We will be taking our European business further because energy markets are globalising," Klaus Schaefer, head of the unit, told a briefing on Wednesday at the company's Duesseldorf headquarters.

"We will be trading out of Chicago by year-end and branching out into more Asian coal and liquefied natural gas (LNG)."

E.ON has for the past 18 months been pursuing the merger of its former Ruhrgas subsidiary with energy trading into one division as part of its efforts to streamline activities and cut costs. The combined business will become operational on May 2.

Schaefer said trading prospects in the United States and Canada had improved since the shale gas glut, which has pushed more U.S. coal exports into the world market. U.S. gas exports may start to flow on a large scale from around 2017, he said.

"We wouldn't want to miss that story," said Gareth Griffith, chief commercial officer of E.ON Merchant Trading.

These efforts would tie in with E.ON's globally growing LNG landing and gasification terminals, which in Europe include activities in the Netherlands, Italy and Spain.

The European LNG market would be "difficult in the next few years", but potentially improving dramatically later this decade, Schaefer said.

Also, increasing renewable energy volumes within the E.ON U.S. portfolio needed managing from inside the country.

E.ON said in February it was hiring traders in the United States and Schaefer put the likely number of hires at five.

E.ON Global Commodities (EGC) - which includes the Merchant Trading operation - has named Ben Pratt as managing director in Chicago. U.S. native Pratt joins from Castleton Commodities International for the fourth quarter 2013 start.

As for the Singapore office, there would be more trade origination sought to respond to growing Chinese and Indian energy demand, Schaefer said.

There are also gaps in the European traded power and gas market left by banks which began retreating last year as they decided to discontinue operations ahead of tighter regulation.

E.ON would step into some of these vacuums, said Christopher Delbrueck, chief financial officer of EGC.

The E.ON group's power trade volumes in 2012 fell 23.5 percent year-on-year to 1.4 billion kilowatt hours and those of gas declined 1 percent to 2.5 billion kWh, its financial report for the year showed.

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