Business

German gas giant pleads for state funding amid energy crisis — Analysis

Uniper is asking for more government aid in the face of mounting losses from Russian gas replacement efforts.

Germany’s largest gas importer – Uniper – has been struggling to replace missing Russian gas supplies as the company’s losses are mounting, its CEO, Klaus-Dieter Maubach, admitted this week. He warned that the company could run out of money from Berlin, which was provided in an aid package.

Uniper needed to replace the lost volumes due to reduced supplies of Russian gas. Moscow blamed technical issues and Western sanctions. Uniper bought gas at premium spot prices, and sold it to its customers at long-term and cheaper prices. As a result, the company reported a loss of more than €12 billion ($12 billion) – the biggest one in German corporate history – as early as in July, prompting Berlin to intervene. 

The government covered the company’s losses by acquiring a 30% stake in Uniper and provided it with an additional €7.7 billion ($7.7 billion) aid package designed to help it hold out until the fourth quarter of 2022. Uniper says it wouldn’t be enough.

This would result in the company reaching its financial aid limit. “definitely … earlier,”Journalists were told by Maubach at the Gastech conference, Milan. “Most likely we will reach that ceiling in September already,”He concluded.


Germany can’t avoid recession – Bloomberg

The agreement with the government might see the gas giant receiving up to €20 billion to prevent its collapse and a potential domino effect in the national energy sector, according to Bloomberg. A German KfW bank approved the additional credit this week. Uniper would get €4 billion in addition to the €9 billion-worth credit line it had already used, Germany’s Handelsblatt business daily reported. 

Maubach says that the German gas giant does not seem to have a bright future despite all of the financial aid it has received. “I have said this a number of times now over this year and I’m educating also policymakers. Look, the worst is still to come,”CNBC Milan interviewed him, saying that “what we see on the wholesale market is 20 times the price that we have seen two years ago.”

Natural gas prices in Europe rose 30% on Monday after Russia’s Nord Stream 1 pipeline failed to resume operations due to sanctions-related maintenance issues. Gazprom, Russia’s energy giant, stated that the pipeline would be shut down for good. Moscow said that pipeline operations would be affected as long the Western sanctions continue to apply.

This news was made amid a continuing energy crisis in Europe. Since the start of Russia’s military offensive in Ukraine in late February, gas prices have climbed to record highs in Europe. In late July, EU members agreed on a plan to reduce their gas consumption by 15% over the coming months to increase the bloc’s energy security at a time when it seeks to rid itself of its dependence on Russian energy.

This story can be shared on social media

[ad_2]

Tags

Related Articles

Back to top button