E.ON Relaunches In-House Trading

EON natural gas

E.ON, the largest German based utility sales company are relaunching their in-house trading business in order to build a global presence.

The Dusseldorf based company have unveiled ‘E.ON Global Commodities’ and ‘E.ON Ruhrgas’. The former a new subsidiary created from the previously known as E.ON Energy Trading which was responsible for trading power, coal and natural gas. The latter, E.ON Ruhrgas, which previously handled long-term physical supply contracts.

Klaus Schafer, Chief Executive of E.ON Global Commodities said that through the relaunch they plan to make E.ON a global organisation as opposed to being almost entirely European based.

E.ON Global Commodities will be looking to trade anything from coal to electricity to natural gas and in particular the merger with Ruhrgas will provide the trading unit access to pipelines and gas storage facilities.

Schafer went on to make the point that there in order to make money in this climate when the global commodities market is facing problems there is a demand for a physical presence.

E.ON are following in the footsteps of many of their competitors and make this move despite Global Commodities facing challenges recently; investment banks are making less money and physical trading houses have seen profits drop.

E.ON’s main rivals – RWE of Germany and EDF and GDF Suez of France are among the European utilities with strong trading arms and oil and gas companies BP, Royal Dutch, Shell, Lukoil and Gazprom have already established in-house trading using independent trading houses such as Vitol.

E.ON Global Commodities will employ 1500 staff but have faced criticism from their rivals who are accusing them of being too focused in Dusseldorf. Their current presence is small in Houston and Singapore, the main energy trading hubs in North America and Asia respectively.

E.ON have confirmed that these are top priorities for E.ON Global Commodities which thinks that the shale boom and a the potential for the US to become an exporter of LNG – a supercooled gas turned into a liquid so it can be shipped – will reorganise the world’s map of natural gas.

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