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EnBW Signs 10-Year Natural-Gas Contract With Foreign Supplier

EnBW Energie Baden-Wuerttemberg AG (EBK), Germany’s third-largest power supplier, signed a 10-year gas contract with an unindentifed foreign gas producer with a value of 600 million ($730 million) euros a year.

The contract, which covers about a third of EnBW’s gas requirements, will start in October, Germany’s third-largest utility said in a statement today.

“The long-term delivery contract with a big volume hedges EnBW against imponderables in gas supply,” EnBW Chief Executive Officer Hans-Peter Villis said in the statement. The deal “considerably” improves the company’s gas-supply situation, he said.

EON AG (EOAN) and RWE AG (RWE), Germany’s two biggest utilities, have lost hundreds of millions of euros on long-term gas contracts as the price they could charge customers slipped below the oil- price linked rates they were paying suppliers. While RWE is still negotiating new terms with OAO Gazprom (GAZP), EON reached an agreement with Russia’s export monopoly on July 3.

EnBW’s contract reflects the increased importance of wholesale markets for the pricing of gas, according to the company’s statement.

To contact the reporter on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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