GERMANY: Germany nationalised its gas giant Uniper on Wednesday after an earlier multi-billion euro bailout failed to keep the gas importer afloat and President Vladimir Putin sent gas prices skyrocketing by announcing partial Russian military mobilisation.
Berlin agreed to purchase the remaining stake owned by Finland’s Fortum in the German gas importer to secure its operations and keep the firm going so that millions of German households can survive the approaching winter.
Ever since Russian president Vladimir Putin launched a “special military operation” in Ukraine on February 24, and set off one of the biggest crises in modern history since World War II, Western nations have backed Ukraine by imposing harsh sanctions on Moscow.
Consequently, European gas and power supply networks have been critically hit as prices surge amid Russia’s blockade of fuel exports. Hence, many customers are now struggling with sky-high, piling gas bills and European utilities are grappling with a liquidity crunch.
“The state will … do everything possible to always keep the companies stable on the market,” German Economy Minister Robert Habeck said, announcing the Uniper move and other steps to help Germany avoid energy rationing this winter.
On top of rising European gas prices, crude oil spiked more than 2% on Wednesday after Putin announced the partial military mobilisation, escalating the war in Ukraine and raising concerns of even tighter restrictions regarding gas and energy.
“The (Russian) move could lead to calls for more aggressive action against Russia in terms of sanctions from the West,” said Warren Patterson, head of commodities research at ING.
After securing Fortum’s stake, the German state will hold about 99% of Uniper, the economy ministry said.
The agreement involves a capital injection of 8 billion euros ($7.94 billion), Uniper said. The German government’s capital contribution will bring the total bailout package to at least 29 billion euros.
Until the eruption of the Ukraine crisis, the European Union was one of the world’s biggest importers of Russian gas and energy. Moscow has now cut flows to Europe via the Nord Stream 1 pipeline to Germany and beyond, saying sanctions have hampered its operations and rendered it impossible to supply gas to European nations.
The EU calls that a convenient excuse for Moscow to continue hoarding gas and mobilising it as leverage against the world.
Russia flows via Ukraine have continued, albeit at a reduced rate. Gazprom, the Kremlin-controlled gas firm which has a monopoly on Russian gas exports by pipeline, said it would ship 42.4 million cubic metres of gas to Europe via Ukraine on Wednesday, in line with recent days.
Eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany were halted on Wednesday, while Russian supply via Ukraine held stable.
In the United States, both Democratic and Republican senators on Tuesday proposed that the Biden administration use secondary sanctions on international banks to strengthen plans for a price cap by G7 countries on Russian oil.
Moscow has said it would cut all oil and gas flows to the West if the such cap was implemented.
The move by U.S. lawmakers came hours before Putin ordered Russia’s first mobilisation since World War II, warning the West that if it continued to threaten Russia with its “nuclear blackmail”, Moscow would respond with its vast arsenal.
Several countries have banned imports of Russian crude and fuel, but Moscow has managed to maintain its revenues through increased crude sales to Asia.