One of Germany’s largest energy providers, Uniper, has used up a 2 billion euro credit line from the German state-owned investment bank and has applied for more money, it said Monday, increasing the pressure on Berlin to bail out the company.
Uniper, which is also Germany’s largest importer of Russian gas, has racked up daily losses of tens of million of euros since Russia cut gas flows to Germany last month, forcing it to buy gas from other sources at much at higher prices. The company has been forced to begin drawing down its own natural gas reserves that were set aside for winter, and has informed customers that gas prices may rise, steps it described as “emergency measures.”
The news comes as flows of natural gas through Nord Stream 1, the main pipeline connecting Germany and Russia, have stopped for annual maintenance. The routine shutdown this year has raised concerns that President Vladimir V. Putin of Russia will keep the pipeline closed to punish Germany and the rest of Europe for their opposition to the war in Ukraine.
Other pipelines, running through Poland and Ukraine, are not being used as alternative links to send gas as they have been in past years during the temporary shutdown, Germany’s pipeline regulator said.
Uniper, based in Düsseldorf, functions as a kind of middleman between Gazprom, the Russian state-owned gas giant, and German factories and municipalities, and it has been forced to make up for shortfalls of Russian fuel through alternate supplies at much higher prices. The company secured the initial line of credit from KfW, Germany’s state-owned investment bank, earlier this year as gas prices rose around Russia’s invasion of Ukraine.
The Russia-Ukraine War and the Global Economy
A far-reaching conflict. Russia’s invasion on Ukraine has had a ripple effect across the globe, adding to the stock market’s woes. The conflict has caused dizzying spikes in gas prices and product shortages, and has pushed Europe to reconsider its reliance on Russian energy sources.
In a statement, Uniper said the credit had been used up in “response to the ongoing supply disruptions of Russian gas and the related developments on the energy markets and exchanges.” The company did not say how much more credit it was seeking.
Earlier this month, Uniper made an “urgent request” for more state help after the German Parliament passed legislation aimed at making it easier for the government to bail out companies essential to keeping warm homes and industries running.
Talks between Uniper and the government have been complicated by the fact that the company’s largest stakeholder is a Finnish firm, Fortum, that itself is predominantly owned by the state of Finland. That has led Berlin to turn to Helsinki for added support for the company. Talks between the two countries are ongoing.
In the weeks before Nord Stream flows halted entirely on July 11, Gazprom had already reduced gas shipments by up to 60 percent, blaming absence of a turbine that had been sent to Canada for repairs and could not be returned because of economic sanctions against shipping technology to Russia. The German regulator disputed Gazprom’s argument, saying it could not determine how the missing part could cause such a cut to flows.
Last week Berlin urged Canadian officials to return the turbine to Germany, saying that it could then deliver the machine to Russia, preventing Canada from breaking its own sanctions against Moscow. Russian media reported over the weekend it had been flown to Germany.
Siemens Energy, which makes the part, on Monday called the German government intervention an “important first step for the delivery of the turbine,” but said in a statement that the logistics and approval process for the transfer of the part were ongoing. “Our goal is to transport the turbine to its place of operation as quickly as possible,” the company said, without elaborating on the part’s location.
The maintenance on Nord Stream 1 is scheduled to be completed by Thursday, although experts have said it could take a day or two longer for flows to return.
In the meantime, Gazprom on Monday touted its success in sending gas to another market China. “July 17 saw a new all-time high for the daily volume of Russian gas supplies to China,” the company said in a tweet.