Energy Crisis: Trillion-dollar debts of EU Energy Companies and Ukraine’s Rescue Supply

European energy and utility companies are raising more debt to cover the costs of a sharp rise in oil and gas prices, according to Bloomberg.

Debt consists of three elements — leveraged bonds, loans and pipeline costs.

Total debt, which began to rise after the pandemic, has increased by more than 50 per cent this year compared to 2020.

According to calculations, if in the fourth quarter of 2019 the total debt of European energy companies amounted to approximately 1.1 trillion euros, then in the second and third quarters of 2022, due to the introduction of sanctions and the increase in energy prices, it was already higher than 1.7 trillion euros.

In the period January to June 2022, energy companies in Europe managed to attract 45 billion euros in bonds and 72 billion euros in loans. Total financing of at least 24 billion euros is under development.

The German company Uniper SE needs about 9 billion euros, and the Czech CEZ CP needs up to 3 billion euros to “overcome the energy crisis,” according to Bloomberg

Ukraine now supplying to Europe

However, on June 30, Ukraine began exporting electricity to Romania, part of a new commercial exchange of electricity between Ukraine and the European Union (EU). In this way, Ukraine can help Europe overcome the energy crisis.

“The initial volume is 100 MW. In just the first day, the state-owned enterprise “Ukrenergo” earned 10 million Hryvnia from the sale of access to the interstate crossing. The export potential of Ukrainian electricity to Europe is up to 2.5 GW.  Under such a scenario, the state will be able to receive over 70 billion Hryvnia per year,” said Prime Minister Denys Shmyhal.

On March 30, Ukraine began supplying electricity to Poland. This became possible thanks to the rapid accession of Ukraine to the unified continental European electricity system ENTSO-E.

The export of Ukrainian electricity is an important element of integration into the EU and an opportunity to obtain additional funds for financing the resistance in the war and post-war reconstruction.