Europe's energy crisis could deliver a $400 million trading profit for Volkswagen from early hedges on natural gas, report says

• Volkswagen could receive about $400 million from natural gas trades, sources told Bloomberg.
• The German auto giant is selling 2.6 terawatt-hours of contracts to boost the supply of gas in European energy markets.

Volkswagen will rake in massive trading profits from early hedges on natural gas, sources told Bloomberg, as Europe's energy crisis has sent prices soaring while also forcing industry to rely on alternative sources.

The auto giant is selling 2.6 terawatt-hours worth of natural gas contracts back into the German market, enough to heat about 200,000 homes for a year.

The company began purchasing the gas in 2020, when prices were about 30 euros per megawatt hour. They have since skyrocketed to around 200 euros amid the fallout of Russia's invasion of Ukraine.

Based on current prices, the trading profits would total about $400 million, though the eventual amount will depend on price fluctuations as the contracts are sold across several weeks, according to Bloomberg.

Volkswagen originally planned to use the natural gas to power the company's two facilities in Wolfsburg as it switched away from coal. The worsening energy picture in Europe has the company sticking to coal for power in the meantime, allowing its gas to ease pressure on energy markets

The German government has been pressuring industries that need large amounts of energy to conserve gas and ensure reserves for the winter, when heating demand jumps.

Volkswagen plans to use the profits from its gas hedges to offset the costs of switching to coal or fuel oil for energy and replacing or retrofitting machinery, sources told Bloomberg.