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Utility Engie braces for less Russian gas as profits rise

The Engie power plant is pictured in Montoir-de-Bretagne near Saint-Nazaire, France, March 4, 2022. REUTERS/Stephane Mahe

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  • H1 net income of 5 billion euros compared to 2.3 billion euros a year ago
  • Maintains 2022 financial forecasts
  • Reduces valuation of Nord Stream 1 stake

PARIS, July 29 (Reuters) – French utility Engie (ENGIE.PA) said on Friday it was well prepared for a cut in Russian gas deliveries as its first-half profits jumped on higher prices Energy.

Engie added that it was working with the Belgian government on a possible extension of the operations of two nuclear units.

Russia’s invasion of Ukraine has highlighted Europe’s dependence on Russian gas, sparking a rush for alternative energy sources.

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Engie’s net profit for the six months ending June 30 rose to 5 billion euros ($5.1 billion) from 2.3 billion a year earlier, as energy companies enjoyed a sharp rise oil and gas prices after the invasion.

Engie kept its financial guidance for 2022 unchanged, citing uncertainty over the general energy market environment.

At 07:03 GMT, its action fell 0.4% to 11.97 euros, after opening higher.

Earlier this week, its British rival Centrica (CNA.L) reported bumper first-half earnings. Read more

“We have taken steps to significantly reduce and minimize our exposure to Russian gas and the first-half performance announced today positions us well for strong results in 2022,” said Catherine MacGregor, CEO of Engie.

REDUCED EXPOSURE TO RUSSIA

For winter 2022-23, Engie said it had significantly reduced previous exposure to volumes purchased from Russia’s Gazprom.

For the winter of 2023-24, it was confident that additional volumes contracted through new sources of supply, including liquefied natural gas, together with an expected drop in demand, would help replace the need for Russian volumes and to achieve the required storage levels.

Engie said it had reduced the valuation of its 9% stake in the Nord Stream 1 gas pipeline, a key Russian supply route, to 305 million euros, down 259 million euros from December 31.

On the blocked Nord Stream 2 pipeline, Engie, as a lender, recognized as of March 31 a credit loss of 987 million euros. This non-operating credit loss had no impact on its recurring income statement, he said.

Engie also announced new measures in France to help consumers cope with rising energy prices.

It will offer an additional 100 euros on average to the 880,000 of its customers benefiting from energy vouchers, i.e. a total of 90 million euros, and a support fund of 60 million euros to help small and medium-sized businesses in difficulty due to higher energy bills.

($1 = 0.9791 euros)

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Reporting by Benjamin Mallet and Dominique Vidalon Editing by Sudip Kar-Gupta and Mark Potter

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