A major importer of natural gas in Germany asked the federal government in Berlin for financial aid
amid the country's ongoing energy crisis.
Natural gas company Uniper was struggling to replace gas supplies following the shutdown of the Nord Stream 1 (NS1) pipeline – at serious loss to the firm. Uniper CEO Klaus-Dieter Maubach made this admission, warning that the energy company could also run out of cash originally given by Berlin as aid.
The company has had to substitute missing gas volumes by buying from the spot market at high prices, which are then sold to customers at cheaper, long-term prices. This resulted in the company having to report more than €12 billion ($12.08 billion) in losses as early as July 2022. Moreover, Uniper's losses – the biggest in German corporate history – prompted Berlin to intervene.
The German federal government covered Uniper's losses by acquiring a 30 percent stake in the company. It also provided the energy company an additional €7.7 billion ($7.75 billion) to help it hold out until the fourth quarter of 2022. Moreover, a later deal could see Uniper receive up to €20 billion ($20.14 billion) to prevent its total collapse.
Maubach, however, said the aid will not be enough. He told journalists during the Gastech conference in Milan, Italy in June 2022 that Uniper will hit the financial limit "definitely earlier" than expected. "Most likely, we will reach that ceiling in September already," explained Maubach.
"I have said this a number of times now over this year, and I'm also educating policymakers. Look, the worst is still to come. What we see on the wholesale market is 20 times the price that we have seen two years ago."
Meanwhile, Russian state-owned gas company Gazprom reiterated that NS1 pipeline operations will be hampered as long as sanctions on Moscow imposed by the West remain in place. Gazprom supplies the natural gas purchased by Uniper. (Related: Russia postpones restoration of gas flow to Europe, citing oil leakage in Nord Stream 1 pipeline.
Uniper, other EU energy firms racking up debt to stay afloat
German business newspaper Handelsblatt
reported that prior to the financial aid package from Berlin, Uniper had already used up a €9 billion ($9.06 billion) credit line. The German state bank KfW also approved an additional €4 billion ($4.03 billion) loan the company applied for.
Uniper is not the only company seeking a bailout
. According to Russia Today
(RT), Czech energy provider CEZ is asking Prague for aid amounting to €3 billion ($3.02 billion).
Meanwhile, a July 18, 2022 report by Bloomberg
stated that overall debt incurred by energy companies in the European Union has jumped by more than half since the pandemic's onset in early 2020. The publication stated that the total amount of debt now stands at €1.7 trillion ($1.71 trillion)
It also noted that the companies raised €45 billion ($45.31 billion) in bonds and €72 billion ($72.49 billion) in loans during the first half of this year alone.
The companies' massive loans came amid an ongoing energy crisis in the EU. Gas prices in the bloc have climbed to record highs since the Russia-Ukraine war began in February 2022.
Head over to EnergySupply.news
for more stories about gas companies in Europe amid the continent's energy crisis.
Watch this RT
report that talks about the possibility of a complete winter blackout in Europe
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