Oil & Gas News

Germany Nationalizes Uniper

Uniper, Germany

By: The New York Times – The German government on Wednesday announced that it was taking over Uniper, previously the country’s largest importer of Russian gas, to ensure the supply of energy to homes and businesses.

The German state will spend 8 billion euros ($7.9 billion) to acquire shares in Uniper it does not already own, giving it a 99 percent stake. It is buying shares from Fortum, a Finnish energy company, which will sell its large stake in Uniper to the German government for €1.70 per share, a fraction of what Uniper’s stock was worth before Russia invaded Ukraine in February when it traded at around €40 per share.

In July, the German government took a 30 percent stake in Uniper and agreed to a €15 billion rescue package. The company is responsible for supplying about 40 percent of all gas used in Germany, including to hundreds of municipalities that provide heating to homes across the country. The Finnish government has a stake in Fortum, and Helsinki had balked at providing further assistance to the German company.

“This step became necessary because the situation has clearly changed” in recent weeks, Robert Habeck, Germany’s economy minister, told reporters. Conditions have worsened, he said, particularly since Russia halted all gas deliveries through the Nord Stream 1 pipeline in early September.

Uniper lost €12 billion in the first half of the year, a result of having to pay inflated prices to make up for the Russian shortfall while upholding its contractual agreements with customers.

“Today’s agreement provides clarity on the ownership structure, allows us to continue our business and to fulfill our role as a system-critical energy supplier,” Klaus-Dieter Maubach, Uniper’s chief executive, said in a statement.

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Uniper was once the largest importer of Russian gas in Europe. As energy prices began to climb in January, it secured €8 billion from Fortum, which had begun a €7 billion takeover for the German company in 2017 that was completed three years later. At that time, the Gazprom was pumping natural gas through Nord Stream and plans for a second version, Nord Stream 2, were moving ahead.

“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio,” Markus Rauramo, Fortum’s chief executive, said in a statement explaining its decision to divest. Fortum’s share price rose 14 percent in early trading in Helsinki.

Fortum, which is majority owned by the Finnish state, is now faced with losses of about €5.5 billion, Mr. Rauramo told reporters in Finland. “The loss is huge,” he said. “Things have not gone as we planned.”

The government in Helsinki had sought to avoid having the company inject any further capital into the German energy provider, amid growing discontent in Finland. Finnish taxpayers, like others in Europe, have faced higher gas prices while their German counterparts have been protected so far, because energy providers cannot directly pass the higher gas prices on to their customers.

Berlin’s decision to nationalize Uniper is the latest example of governments across Europe reversing decades of promoting a free-market approach to the electricity and natural gas industries, as lawmakers move to ensure supply in the face of record-high energy prices. Uniper was the second energy company within a week that the German government has to save by intervening to ensure supply. On Friday, Berlin placed a German subsidiary of the Russian oil giant Rosneft in trust as it prepares to cease all imports of crude from Russia by the end of the year.

Germany has been buying more natural gas from Norway, the Netherlands and other countries that cool and ship the fuel as liquefied natural gas. But that has driven prices up to previously unseen levels, with the benchmark European gas contract setting a record high last month. It currently trades at just over €200 per megawatt-hour, down from recent highs but more than double the level in early June.

Asked whether Uniper had considered filing for bankruptcy instead of seeking help from the German government, Mr. Maubach said the move had been considered, but was never considered a serious option.

“They would have had to do what we have had to do, buy gas on the open market for much higher prices,” Mr. Maubach told reporters.

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