FRANKFURT, Aug 12 Reuters German utility EnBW said reduced Russian gas flows dealt a 545 million euro 561 million hit to its firsthalf core profit, as it was forced to buy gas at much higher prices from alternative sources.

EnBW, which mainly supplies power and gas to the German state of BadenWuerttemberg, home to major carmakers MercedesBenz and Porsche AG, reported a 3.7 decline in firsthalf adjusted EBITDA to 1.42 billion euros.

The company, which is de facto stateowned, blamed higher costs for the decline, partly offset by higher renewables earnings, and said it had to rely on reserve power plants much more than anticipated in order to guarantee supply.

The group39;s gas division VNG VNG.UL has two longterm Russian gas contracts with a volume of 100 Terawatt hours TWh, one with the Nord Stream 1 pipeline, which is majorityowned by Gazprom, and one with Gazprom Germania, which has been under German trusteeship since April.

EnBW said the total potential damage from these two contracts lies in the low singledigit billion euro range.

Nord Stream 1 is running at just 20 of its capacity, forcing German importers to buy volumes at skyrocketing prices on the spot market and which has triggered a bailout of VNG39;s larger peer Uniper.

EnBW, which in April agreed a 660 million euro credit line with state lender KfW KFW.UL, said one of VNG39;s two Russian contracts would run out by the end of the year, leaving the group with just one contract covering 65 TWh as of next…