German gas giant begging for state funding
Uniper’s CEO Klaus-Dieter Maubach warns that Germany’s largest gas importer might run out of money provided by Berlin in the form of an aid package later this month.
Uniper, Germany's largest gas importer, felt the pain of sky-high energy prices as it struggles to replace Russian gas supplies amid mounting losses, as per its CEO Klaus-Dieter Maubach.
The CEO also cautioned that the company might run out of money provided by Berlin in the form of an aid package later this month.
Due to reduced Russian gas supplies, which Moscow blamed on technical issues and Western sanctions, Uniper was forced to compensate for the lost volumes by purchasing gas at high spot market prices and selling it to customers at lower long-term prices.
As a result, the company reportedly made a loss of more than $12 billion as early as July, forcing the government to intervene.
The government compensated Uniper for its losses by acquiring a 30% stake in the company and providing it with an additional $7.7 billion aid package to help it survive until the fourth quarter of 2022. Uniper now admits that it would be insufficient.
Maubach tersely warned that the company would hit the financial aid limit “definitely … earlier”.
“Most likely we will reach that ceiling in September already,” he told reporters on the sidelines of the Gastech conference in Milan.
According to Bloomberg, the agreement with the government could result in the gas giant receiving up to €20 billion to prevent its collapse and a potential domino effect in the national energy sector.
Furthermore, the company is about to receive additional credit from the German state bank KfW, which was approved this week.
Uniper would receive €4 billion in addition to the €9 billion credit line it already had, as per Germany's Handelsblatt business daily.
Despite all of the financial assistance, the German gas giant's future does not appear to be bright, according to Maubach.
"Look, the worst is yet to come," he said.
"What we see on the wholesale market is 20 times what we saw two years ago," he added.
About 60% of Germany's natural gas supply was piped in from Russia in 2020, primarily under long-term contracts.
On Monday, natural gas prices in Europe rose by 30% after Russia's Nord Stream 1 pipeline failed to restart operations due to sanctions-related maintenance issues. The pipeline's operator, the Russian energy giant Gazprom, said it would remain closed indefinitely. Moscow went on to say that as long as Western sanctions remain in place, pipeline operations will be hampered.
Germany’s winter energy crisis
The German government approved Sunday a $64.7 billion relief package, which includes continued cheaper public transport and tax breaks for energy-reliant companies, as they have been affected the most by the biggest surge in prices.
According to the Federal Statistical Office, Germany's inflation rose to almost 8% in August after declining slightly in the months of June and July.
The consecutive sanctions against Moscow prompted a race against the clock to diminish Germany's reliance on Russian gas before winter.
13 EU nations have either ceased getting Russian gas entirely or are only receiving a portion of it due to the temporary blockage of the Nord Stream pipeline 1, according to TASS.
This is the third relief package by the German government this year. The two previous ones included a gasoline rebate that expired at the end of August, the €9 transportation ticket, and an energy price flat payment to workers.