Negotiations between Uniper, the fully-owned E.ON subsidiary, and Gazprom to adjust the prices of long-term gas supply contracts have led to an agreement earlier than anticipated. The agreement resolves a pending arbitration proceeding between the companies. Alexander Medvedev, Deputy Chairman of the Management Committee of OAO Gazprom, Elena Burmistrova, General Director of Gazprom export LLC, and Klaus Schäfer, Chairman of Management Board of Uniper AG, signed an agreement to this effect.
The agreement will enable E.ON to release some of the provisions recorded in prior years, resulting in a non-recurring positive EBITDA effect of about €380 million in the first quarter of 2016. The release of the remaining provisions, made in several years, will result in cash outflow of € 800 million, probably in the second quarter.
For E.ON the agreement will have the following effect: The non-recurring positive effect serves to increase E.ON’s forecast range for its 2016 EBITDA from between €6.0 and €6.5 billion to between €6.4 and 6.9 billion.1 Similarly, instead of underlying net income of €1.2 to €1.6 billion, E.ON now expects the range to be between €1.5 and €1.9 billion.
“Gazprom and Uniper have again demonstrated that long-term gas supply contracts are amenable to flexible solutions,” Uniper CEO Klaus Schäfer said. “Even in a difficult market environment characterized by significant declines in energy prices, our partnership has proved itself again. Long-term gas supply contracts will remain a mainstay of a stable supply of heat and electricity for Europe.”
With this agreement the prices are adjusted on the basis of our current market conditions. Uniper thereby derisked its long-term gas supply contracts for the upcoming years.
