Aug
21

Dong Cuts Hedges After Freeing Gas From Oil-Index Ties

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Dong Energy A/S will cut its internal hedging of oil prices as it reduces oil-indexation on long-term gas contracts, Chief Executive Officer Henrik Poulsen said in an interview.

The utility, which Goldman Sachs Group Inc. bought an 18 percent stake in last year, has traditionally used its North Sea oil and gas output to counter the risk of price swings in its long-term gas contracts. But that hedge is becoming less important as Dong renegotiates gas contracts.

“The market reality is quite new after oil prices dropped to half their level 12 months ago,” Poulsen said in a phone interview on Wednesday. “I’m not sure it’s strategically important but” the internal hedging is “providing operational gains.”…

Dong Cuts Hedges After Freeing Gas From Oil-Index Ties

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