Enabling green choices despite market turmoil

Enabling green choices despite market turmoil
Energy Risk Commodity rankings 2023 winner-logo-BB8

Throughout recent market tumult, ENGIE remained committed to net zero, forging even closer connections with clients to fuel global growth

Diversification, close connections with clients and a commitment to decarbonisation in the face of unprecedented geopolitical risks and pricing volatility have helped ENGIE Global Energy Management & Sales (GEMS) deliver another standout year.

The firm was among the strongest performers in this year’s Energy Risk Commodity Rankings, being voted Best overall energy dealer, up from second place last year, and dominating the European natural gas categories. It ranked first place in natural gas overall, after coming second last year, and received 11 first-place rankings throughout the survey, including liquefied natural gas (LNG), power dealer for the UK, France and Belgium, and natural gas options and structured business.

“We have developed a unique combination of expertise over more than 20 years operating in markets worldwide and managing our group’s assets,” says Edouard Neviaski, chief executive of ENGIE GEMS. ENGIE’s global reach, combined with local presence, have enabled the firm to develop a nuanced understanding of local markets and clients’ specific needs, he says. Today, it has a downstream position of more than 190,000 clients globally.

“With an expertise combining physical energy supply, financial risk management and client intimacy, we are in a position to provide our clients with the customised support they need,” Neviaski says.

Energy Risk: The events of last year created extraordinary conditions, especially in the gas and power markets. What was your strategy for navigating such volatile markets? 

Edouard Neviaski, ENGIE
Edouard Neviaski, ENGIE

Edouard Neviaski: We engaged in constant and daily crises monitoring to proactively manage political, market, credit and liquidity risks. The management team remained in close and continuous proximity with all teams in the organisation.  

In each of the situations we’ve faced in recent months – whether tackling the impact of the Covid-19 pandemic, the Russia-Ukraine war or the energy market dislocation in Europe – one key priority was to remain close to our people so we could guarantee safety and business continuity. We ensured continuous information was provided nearly every week across the organisation, sharing any updates relating to markets, political decisions, and actions and decisions taken at group level and within our entity.

Another priority was to keep and intensify proximity with our clients and help them tackle the dramatic market conditions impacting their businesses and energy procurement.

Energy Risk: What were the main challenges you and your clients faced last year?  

Edouard Neviaski: The end of Russian gas posed a threat to security of supply, but the organisation took multiple actions across the gas value chain to ensure security of gas supply. 

Our European gas hedging positions were optimised to minimise risk in the event of supply disruption. Our upstream portfolio diversification strategy paid off, and we were able to rapidly grow our volumes in gas and increase our share of volumes sourced with low-methane-intensity gas produced in the North Sea.

Our clients also faced dramatic price volatility on the markets, with prices rising to unprecedented levels. Liquidity and credit lines were major issues for clients during these times of crisis. However, payment default risks were managed effectively with the clients, resulting in no major credit events.

Energy Risk: What do you foresee keeping you awake at night over the next year? 

Edouard Neviaski: Our main focus over the next year will probably be to further ensure the security of supply for our clients globally, while delivering our decarbonisation road map. 

This will require attracting and retaining talented individuals who are specialised in the green technologies of tomorrow, and helping them grow in a world faced with strong challenges and adverse events.

Energy Risk: ENGIE was voted Best overall energy dealer. What differentiates you from others in the market? 

Edouard Neviaski: Despite the several shocks that hit energy markets, we managed to keep our business up and running throughout. We kept in very close contact with our clients and never stopped pricing, thanks to the automation of our processes that helped us answer increasing requests we had from our existing and newly onboarded clients. 

Among the critical issues we had to tackle were liquidity and credit risks; we saw some of our peers forced to halt their activities in that context. Our status of investment service provider has also been instrumental as it has spread a culture of risk management throughout the organization, and promoted a can-do attitude towards proactively tackling the challenges of these successive crises.

Energy Risk: ENGIE topped the over-the-counter (OTC) trading platform category for the second year running. How has this business grown in the past year, and what are your expansion plans? 

Edouard Neviaski: Our OTC trading platform EGMA has been instrumental in helping us handle and proactively manage the crises we went through.

Thanks to EGMA and the robustness of our trading framework, we never stopped showing prices. We managed market risks even when liquidity was very poor. Price volatility meant that many clients needed to manage their market risk exposure. 

Such volatility led to a surge in trading activity, resulting in higher traded volumes. EGMA was key to mitigate risks linked to large margin calls at commodities exchanges. EGMA’s OTC nature enabled increased flexibility and customised risk management solutions. Clients’ engagement levels significantly grew as they were closely monitoring the markets. 

These impacts are reflected in EGMA’s outstanding results, with 12,000 deals performed on the platform last year. Some 80 new clients were onboarded, taking the total number of EGMA clients to 259, with more than 1,000 users to date.  

More than one-third of ENGIE’s commercial transactions within the firm’s GEMS business are performed through EGMA today. Our ambitions for the platform are to further expand the geographical footprint of EGMA.

Energy Risk: What were the standout achievements of your green strategy last year? 

Edouard Neviaski: Chief among our major achievements have been our biomethane developments. With 3 terawatt hours of biomethane supplied to our partner Arkema over 10 years, we are supporting the sustainability of Arkema’s products. 

By adapting our corporate power purchase agreement (PPA) structure for this deal, we have created a biomethane purchase agreement that ranks among the largest private biomethane deals in Europe to date, and the chemicals sector’s first voluntary, long-term physical biogas purchase.

Another major achievement is the partnership we have sealed with Google. This has grown from signing PPAs to developing the first-ever 24/7 electricity agreement in Europe. This partnership is ever-growing and together, by mingling our respective expertise in the field of IT technology and energy, we are building the low-carbon technologies of tomorrow.

See the full Energy Risk Commodity Rankings 2023 results

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