BERLIN (AP) – The German government said Wednesday that it has agreed to nationalize the country’s biggest natural gas importer, Uniper, expanding state intervention in the industry to prevent an energy shortage resulting from Russia’s war in Ukraine.
Uniper is a continuation of a rescue plan that was agreed upon in July. The agreement includes an 8 billion euro capital increase (dollars) Germany will finance. In the deal, the government will acquire a 99% interest in the energy supplier. Fortum (Finland) was the previous owner. Fortum’s largest shareholder is the Finnish government.
Germany’s economy minister, Robert Habeck, said the deal was necessary because of the significance that Uniper plays in the German gas market. It still needs to be approved by the European Commission, the European Union’s executive arm.
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Uniper is responsible for 40% of Germany’s gas customers. Before the war, about half its gas came from Russia.
The company´s losses have mounted as Russia has reduced natural gas supplies to European countries supporting Ukraine. These cuts resulted in high fuel prices, which are needed to heat homes and generate electricity. This has raised fears about business closings and could lead to rationing. Uniper was forced to purchase gas at much higher prices to meet its supply contract.
European nations have been trying to stem the spiraling price of oil and have prioritized winter security, which includes filling up their natural gas storage. Germany took control of three Russian-owned oil refining plants last week before the embargo on Russian oil goes into effect in next year.
Habeck pointed out that Germany had managed to increase its storage capacity to more than 90% in preparation for winter heating, despite Russia’s halting deliveries via the Nord Stream 1 pipeline. According to Habeck, wholesale prices of gas have nearly fallen by half since summer.
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“This means that, as a whole, we have coped quite well with the situation,”Habeck stated. “But for Uniper, the situation has become significantly more dramatic and significantly worse.”
Still, gas prices are at an all-time high. Habeck claimed that Uniper is crucial for German gas market and that the government decided to nationalize Uniper “to ensure security of supply for Germany.”It continues to support plans that consumers will pay a gasoline surcharge. This is despite opposition from some parties.
Uniper provides gas services to around 200 German municipal utilities. Uniper also owns stakes in power stations in Germany, Britain and Hungary as well as in Russia, Sweden, Russia, Hungary and the Netherlands.
Christian Lindner (German Finance Minister) made it very clear that Uniper’s government decision was to be nationalized “in large part because of the enormous increase in economic risks there, which would no longer have been borne privately.”
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“But that is not a decision that in the long term the German state will now be involved in the distribution and procurement of gas,”He said.
Lindner indicated that he anticipates a normalization in gas prices as Germany opens new liquefied gas terminals.
“It won´t be as cheap as Russian pipeline gas anymore, but not as expensive as we currently see that in the markets processing the big shortage,”He said. “But we need to find a bridge to get to this normalized market. Because otherwise in the meantime too many livelihoods, too many businesses and jobs will be lost.”
Fortum’s chief executive said the company´s divestment of Uniper was “the right step to take.”
“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio,” CEO Markus Rauramo said.
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Tytti Tuppurainen, the Finnish minister responsible for government-controlled companies, said in a news conference that the Uniper deal was “inevitable” so that Fortum´s losses could be limited and the Finnish state would no longer have to capitalize the troubled Espoo, Finland-based energy group.
She made clear that the Finnish government wasn´t happy with the end result with Uniper, but acknowledged that Wednesday’s deal was “the unfortunate fact”Finland will have to address this issue.
“This agreement secures Fortum´s position and the (Finnish) state now has no need to capitalize the company. Of course, no one can say this for sure,” Tuppurainen told reporters.
The Finnish government owns just over 50% in Fortum that is deemed a crucial company for the Nordic country´s energy security.
Uniper shares dropped by three percent on Wednesday at the Frankfurt stock exchange, compared with Tuesday.
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Separately, the German government declared last Friday that it was taking control of three Russian oil refineries owned by Russia. The administration of Rosneft’s two subsidiary companies is being taken over by the National Network Regulator.
Rosneft accounts for about 12% of Germany´s oil refining capacity, importing oil worth several hundred million euros (dollars) every month, according to the government, which said the trusteeship was initially due to last for six months.
The network regulator already was put in charge of Gazprom´s former German subsidiary in April, a decision that the government said was necessary to bring “order to the conditions”The company was established after its Kremlin-controlled parent firm abruptly severed all ties to it.
According to environmentalists, Uniper’s nationalization should be a signal that the government is ready to move the company from fossil fuels.
“Uniper must say goodbye to coal and gas, and become a relevant actor in the energy transition,”Olaf Bandt is the chairman of BUND, a German environmental organization.
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