European energy crisis: Germany nationalises biggest gas importer Uniper, as winter looms

Germany, Europe's largest economy, is staring at a looming energy crisis this winter, having been queezed by vastly reduced gas flows from Russia, as punishment for its support of Ukraine, which has sent prices soaring

AgenciesUpdated: Wednesday, September 21, 2022, 03:49 PM IST
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Representative Image | AP

The Government of Germany confirmed on Wednesday that it would be nationalising the country’s biggest gas importing company, Uniper, thereby broadening state intervention in the industry, in order to stave off an energy shortage during the coming winter as a result of Russia’s war in Ukraine.

The acquisition will cost German taxpayers 8 billion euros (US$ 7.9 billion).

Germany, Europe's largest economy, is staring at a looming energy crisis this winter, having been queezed by vastly reduced gas flows from Russia, as punishment for its support of Ukraine, which has sent prices soaring.

The announced nationalisation plan builds on an earlier bailout package which was agreed to in July, in which the German government agreed to provide a 15 billion euro bailout package to the struggling energy business, which burned through its cash reserves buying alternative -- and more expensive -- supplies, after Moscow cut gas flows to Germany.

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.

Uniper supplies about 40% of all gas customers in Germany and before the war it bought about half of its gas from Russia.

Surging gas prices and Russia’s squeeze on supplies to Europe have already prompted a series of bailouts and rescue loans. But those measures are increasingly dwarfed by the scale of the crisis, and there was a risk that systemic energy providers collapse without more robust government support.

European countries have scrambled to counter the price spiral and prioritized securing their energy supplies for winter, including by filling their natural gas storage. Just last week, Germany also moved to take control of three Russian-owned oil refineries before an embargo on Russian oil takes effect next year.

Habeck noted that Germany has managed to fill its gas storage facilities to over 90% capacity in preparation for the winter heating season despite Russia halting gas deliveries through the Nord Stream 1 pipeline. Wholesale prices for gas have almost halved since the summer, he said.

“This means that, as a whole, we have coped quite well with the situation,” said Habeck.

“But for Uniper the situation become significantly more dramatic and significantly worse.”

Citing the importance of Uniper for the German gas market, Habeck said the government had chosen to nationalize the company “in order to ensure security of supply for Germany.”

Chancellor Olaf Scholz has insisted that Germany is well-placed to get through the winter with enough energy, pointing to new liquefied natural gas terminals expected to start work in the coming months, among other things.

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