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30Jun22


German Gas Giant May Require Buyout as Anti-Russia Sanctions Backfire


Russia, one of the main exporters of natural gas to Germany, was forced to cut the Nord Stream 1 supply after turbines for gas-pumping were stuck in Canada, where they underwent maintenance. Ottawa refuses to clear them for return to Russia citing sanctions.

Germany's main gas buyer, Uniper, has warned investors of falling profits and a potential need for a government buyout, as well as withdrawing its previous, more optimistic forecast.

Uniper added it expected 2022 income to be "significantly below" previous years, citing reduction of gas supplies from Russia, in which the company specializes, to just 40% of what had been originally ordered.

The gas giant also cited high natural gas prices in the on-the-spot market, which the company is forced to tap into to compensate the loss of supplies from Russia's Gazprom, as the reason for its financial woes. Uniper stressed that it "cannot yet pass on these additional costs" to the customers, and as a result suffers from "significant financial burdens".

The company went on to warn investors that it might draw on and even expand on a 2 billion credit line provided by the state-owned KfW bank in order to survive.

"[Uniper is] now talking to the German government again about stabilization measures, for which a number of instruments can be considered, such as guarantees and collateral, an increase in the current credit facility and equity investments".

Uniper said that some of the financial burden might be "partially passed on" to consumers if Germany triggers its contingency plan in case of gas shortages, which imply strict rationing of the fuel. The company, however, did not provide any details.

Berlin earlier triggered the second out of three stages of its contingency plan after gas supplies from Russia via the Nord Stream 1 pipeline dropped to just 40% of maximum capacity on 14 June. Gazprom explained that it happened after two turbines needed to pump the fuel were not returned in time from maintenance in Canada. Their return was blocked by the authorities, which cited anti-Russia sanctions imposed over its special military operation in Ukraine.

German Chancellor Olaf Scholz rushed to accuse Moscow of blackmail, claiming the reduction of gas was a "political move". However, the turbine manufacturer, German Siemens, soon chipped in confirming that the turbines were stuck in Canada and that it was working on resolving the issue. The company did not give a timeline for turbine's return.

The drop in gas supplies happened as Germany and the rest of Europe are scrambling to fill their gas reservoirs to prepare for winter and fearing that the blue fuel shipments from Russia will be cut off - either by new EU sanctions, which already banned Russian oil amid surging fuel prices, or by Moscow itself.

The Kremlin never threatened cutting off Europe of its gas as long as the countries were paying.

German Chancellor Olaf Scholz rushed to accuse Moscow of blackmail, claiming the reduction of gas was a "political move". However, the turbine manufacturer, German Siemens, soon chipped in confirming that the turbines were stuck in Canada and that it was working on resolving the issue. The company did not give a timeline for turbine's return.

The drop in gas supplies happened as Germany and the rest of Europe are scrambling to fill their gas reservoirs to prepare for winter and fearing that the blue fuel shipments from Russia will be cut off - either by new EU sanctions, which already banned Russian oil amid surging fuel prices, or by Moscow itself.

The Kremlin never threatened cutting off Europe of its gas as long as the countries were paying.

[Source: By Tim Korso, Sputnik, Moscow, 30Jun22]

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