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Utility Engie prepared for less Russian gas as profits surge

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·2-min read
Engie power plant in Montoir-de-Bretagne
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By Benjamin Mallet

PARIS (Reuters) -French utility Engie said on Friday it was well prepared for a reduction in deliveries of Russian gas, as its first-half profits surged on the back of higher energy prices.

Engie added it was working with the Belgian government on possibly extending operations at two nuclear units.

Russia's invasion of Ukraine has thrown the spotlight on the Europe's reliance on Russian gas, prompting a scramble to find alternative energy sources.

Engie's net income for the six months to June 30 rose to 5 billion euros ($5.1 billion) from 2.3 billion a year earlier, as energy firms cash in on a sharp rise in oil and gas prices following the invasion.

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

At 0703 GMT, its shares were down 0.4% at 11.97 euros, after opening higher.

Earlier this week, British rival Centrica reported bumper first-half profits.

"We have taken actions to significantly reduce and minimize our exposure to Russian gas and the H1 performance announced today positions us well to deliver strong results in 2022," said Engie CEO Catherine MacGregor.

REDUCED RUSSIA EXPOSURE

For winter 2022-23, Engie said it had substantially reduced the previous exposure to volumes procured from Russia's Gazprom.

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

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

On the stalled Nord Stream 2 pipeline, Engie, as a lender, recognised as of March 31 a credit loss of 987 million euros. This non-operating credit loss did not impact its recurring profit and loss account, it said.

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

It will offer an extra 100 euros on average to the 880,000 of its customers who receive energy vouchers, totalling 90 million euros, and a 60 million euros support fund to help small and medium-sized companies facing difficulties due to higher energy bills.

($1 = 0.9791 euros)

(Reporting by Benjamin Mallet and Dominique VidalonEditing by Sudip Kar-Gupta and Mark Potter)

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