After setting aside almost half a trillion dollars to date tackling its energy crisis, Germany is also poised to take on the risks associated with 216 billion euros ($229 billion) of derivatives built up by energy giant Uniper.
Derivative positions of Uniper outstrip energy giant BPsetting aside almost half a trillion dollars
Like other energy firms, Uniper uses derivatives, such as securing an option to sell gas at a set price in the future, to guard against energy price swings. These carry risks in themselves, however, and have become costly to maintain. Whether used for hedging or speculation, derivatives carry risks. If the market price falls far short of or soars past an option price, the cost of keeping this trade can jump.
That could in turn lumber the German government, which is already spending more than 51 billion euros to prop up and nationalise Uniper, with greater costs once it completes its takeover of the utility, which is expected shortly. "We have to assume that the non delivery from Russia will continue and that there will be further losses. Without the ... gas deliveries from Russia, the gas business will make losses until the end of 2024," the spokesperson said.
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