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Released August 02, 2022 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Germany has been forced to bail out one of its largest gas storage and energy companies, Uniper SE (Dusseldorf, Germany), to the tune of 15 billion euro (US$15.2 billion) due to Russia's strangling of gas supplies into Europe.
The government has agreed to take a 30% stake in the company for a payment of 267 million euro (US$271 million) alongside 7.7 billion (US$7.8 billion) available as hybrid capital to Uniper. It will also increase the current credit line of 2 billion euro (US$2.1 billion) to 9 billion euro (US$9.1 billion) via the state-run bank KfW. Uniper's Finnish parent company, Fortum Oyj (Espoo, Finland), which is majority-owned by Finland's government, has agreed to see its share reduced from 80% to 56%.
Since the start of Russia's invasion of Ukraine in February, Germany has cut its reliance on Russian gas from 55% to 26%, but the country still remains heavily reliant on Russian gas. Uniper owns and operates about 8 billion cubic meters (Bcm) of underground gas storage capacity in Germany, Austria, and Britain--almost 6 Bcm of that in Germany. Russia's throttling of supplies has forced Uniper and other European players to buy more expensive gas on the open markets, a situation that has been made it harder in Germany by the government's refusal to allow companies pass the higher prices onto consumers.
In June, Russia's state-owned Gazprom reduced gas flows via the Nord Stream 1 pipeline into Germany--which is then sent on to other parts of Europe--to 40%. This was followed in July by a 10-day outage of Nord Stream 1 due to maintenance. When the pipeline came back online recently, the supplies remained at just 40% of usual capacity.
Talking about its decision, German Chancellor Olaf Schulz said: "Uniper has got into great difficulties, a company that is of paramount importance for the economic development of our country, for the energy supply of the individual citizens, but also for many companies. It has bought gas from many who have made it available to it, including Gazprom and Russia. As we all know, these deliveries are no longer safe. Some of the gas that Uniper has bought and resells to its customers is not being delivered. The company must therefore procure this gas again at much higher prices - at current world market prices. This creates a difficult situation for the company because it cannot pass on the prices it pays for the gas to its customers and is therefore unable to cope with the financial tasks. The solution is: we will take a 30% stake in Uniper."
Uniper Chief Executive Officer Klaus-Dieter Maubach said: "I'm pleased and relieved that today's agreement stabilizes Uniper financially as a system-critical energy partner and preserves it as a single entity. We now have a clear perspective on how the costs which arise due to the interrupted gas supplies from Russia can be shared by many shoulders going forward. For me, this makes it clear: Uniper, with all its employees, is and will remain a central, strategic partner for security of supply, diversification of energy supplies, and decarbonization."
Uniper is a key player in the country's alternative gas strategy to create a liquefied natural gas (LNG) infrastructure. Germany has no LNG terminals. In early July, Industrial Info reported that Uniper had started work on Germany's first LNG terminal at Wilhelmshaven. It is the first of four planned German LNG projects that Industrial Info is tracking, all of which are being fast-tracked by the German government in order to end its reliance on Russian gas. The Wilhelmshaven terminal will be capable of handling up to 7.5 Bcm of natural gas per year--about 8.5% of Germany's annual gas demand.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The government has agreed to take a 30% stake in the company for a payment of 267 million euro (US$271 million) alongside 7.7 billion (US$7.8 billion) available as hybrid capital to Uniper. It will also increase the current credit line of 2 billion euro (US$2.1 billion) to 9 billion euro (US$9.1 billion) via the state-run bank KfW. Uniper's Finnish parent company, Fortum Oyj (Espoo, Finland), which is majority-owned by Finland's government, has agreed to see its share reduced from 80% to 56%.
Since the start of Russia's invasion of Ukraine in February, Germany has cut its reliance on Russian gas from 55% to 26%, but the country still remains heavily reliant on Russian gas. Uniper owns and operates about 8 billion cubic meters (Bcm) of underground gas storage capacity in Germany, Austria, and Britain--almost 6 Bcm of that in Germany. Russia's throttling of supplies has forced Uniper and other European players to buy more expensive gas on the open markets, a situation that has been made it harder in Germany by the government's refusal to allow companies pass the higher prices onto consumers.
In June, Russia's state-owned Gazprom reduced gas flows via the Nord Stream 1 pipeline into Germany--which is then sent on to other parts of Europe--to 40%. This was followed in July by a 10-day outage of Nord Stream 1 due to maintenance. When the pipeline came back online recently, the supplies remained at just 40% of usual capacity.
Talking about its decision, German Chancellor Olaf Schulz said: "Uniper has got into great difficulties, a company that is of paramount importance for the economic development of our country, for the energy supply of the individual citizens, but also for many companies. It has bought gas from many who have made it available to it, including Gazprom and Russia. As we all know, these deliveries are no longer safe. Some of the gas that Uniper has bought and resells to its customers is not being delivered. The company must therefore procure this gas again at much higher prices - at current world market prices. This creates a difficult situation for the company because it cannot pass on the prices it pays for the gas to its customers and is therefore unable to cope with the financial tasks. The solution is: we will take a 30% stake in Uniper."
Uniper Chief Executive Officer Klaus-Dieter Maubach said: "I'm pleased and relieved that today's agreement stabilizes Uniper financially as a system-critical energy partner and preserves it as a single entity. We now have a clear perspective on how the costs which arise due to the interrupted gas supplies from Russia can be shared by many shoulders going forward. For me, this makes it clear: Uniper, with all its employees, is and will remain a central, strategic partner for security of supply, diversification of energy supplies, and decarbonization."
Uniper is a key player in the country's alternative gas strategy to create a liquefied natural gas (LNG) infrastructure. Germany has no LNG terminals. In early July, Industrial Info reported that Uniper had started work on Germany's first LNG terminal at Wilhelmshaven. It is the first of four planned German LNG projects that Industrial Info is tracking, all of which are being fast-tracked by the German government in order to end its reliance on Russian gas. The Wilhelmshaven terminal will be capable of handling up to 7.5 Bcm of natural gas per year--about 8.5% of Germany's annual gas demand.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
