RWE Supply and Trading targets growth in Asia

German utility RWE's trading arm, RWE Supply and Trading, is looking to further expand in Asia.

RWE set up a trading desk in Singapore as early as 2010. More than 30 traders and support staff are now based in the Singapore office, and RWE has also opened offices in Beijing and Shanghai. "When it comes to our global growth strategy, Asia is certainly key," chief commercial officer Peter Krembel said.

RWE has already set up coal, freight, iron ore and power trading activities in Asia, Krembel said. And the utility sees further growth in LNG, which it trades from its offices in London and Singapore. Global LNG supply-demand is a key driver for European gas hub prices, determining the attractiveness of LNG deliveries to Europe and influencing gas' merit order in power mixes. "For us, it has always been a global picture when it comes to what is setting prices in the European power market — first with international coal prices, then with the EU emissions trading system (EU ETS) acting as a sort of bridge element between fuels' markets, and now with LNG linking European gas prices to the Asian and US gas hubs," he said.

RWE announced last year that it had signed an agreement with German LNG Terminal, the joint venture developing Germany's first LNG terminal, at Brunsbuettel, to secure a significant amount of the terminal's capacity on a long-term basis as part of its strategy to expand in the LNG market.

And RWE Supply and Trading could step up its activities in wholesale power trading outside Europe, not least because of its planned acquisition of German firms Innogy and Eon's renewables arms. The acquisition is still subject to approval from competition authorities. RWE aims to intensify its evaluation of Eon and Innogy operations towards the end of the third quarter, Krembel said. Eon has renewable assets in the US, where RWE currently has no physical operations but has been trading gas and power derivatives for over five years. RWE will examine potential synergies once the deal is complete, Krembel said.

RWE said last month that it will focus renewables expansion on onshore and offshore wind and solar photovoltaic (PV) capacity in the US, core markets in Europe and new Asia-Pacific markets, once its asset swap deal with Eon is complete.

And RWE is still interested in Japan's power market — which offers strong physical demand and an attractive generation mix — Krembel said. But more progress in liberalising the market is required before RWE would consider entering Japan, he added.