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(Sharecast News) - Europe's energy firms are under pressure as so-called margin calls for at least $1.5trn strain their liquidity, Norwegian oil major Equinor said.
In an interview with Bloomberg on the sidelines of the Gastech conference in Milan, Equinor senior vice-president for gas and power, Helge Haugane, said the company's $1.5tr estimate was "conservative".
Margin calls are required by exchanges in case trades through financial derivatives go awry in order to try and ensure that the risk to financial counterparties is reduced to manageable levels.
But extreme price volatility can lead to exorbitant costs for providing the necessary collateral for such trades.
Against that backdrop, Haugane reportedly backed some of the plans announced by Brussels the day before to intervene, reportedly saying that they would be "sensible" in the case of derivates trading, while for Equinor price caps on electricity would make sense.
Natural gas markets would be a different matter because they are global and price caps do not add to supply or reserves.
Among the measures that were being studied by the European Commission were credit lines from the European Central Bank, new products that could be used as collateral and the temporary suspension of derivatives markets, Bloomberg reported.
On the flip-side, in a separate interview Anatol Feygin, Cheniere Energy's chief commercial officer, expressed a degree of optimism that the industry would be able to adapt.
"The bridge financing has been available to date.
"So far everyone has managed to find a way because the industry ultimately performs: the physical volumes are delivered and the financial positions have been settled."