Germany’s Uniper warns of possible Nord Stream 2 loan write-off
Energy company was 1 of 5 to lend to Gazprom-led pipeline, now threatened by US sanctions
The German energy company Uniper said it may have to write off a loan it provided to the controversial Nord Stream 2 gas pipeline, citing a growing risk the project could be delayed or even collapse under the pressure of US sanctions.
In July, the Trump administration ramped up efforts to derail the Baltic Sea pipeline project, which is being built by Kremlin-controlled Gazprom. It threatened not only sanctions against companies involved in building the pipeline, but those facilitating it.
Half the funding for the pipeline has been provided by five European energy groups: Shell, Uniper, OMV, Wintershall and Engie.
Andreas Schierenbeck, Uniper’s chief executive, on Tuesday told a conference call that he still expected the pipeline to be completed, and said the sanctions would not directly hit Uniper, as a financial partner.
However, he added: “We can’t exclude [the possibility of] such an extreme scenario. We can’t exclude that we could have further delays and that the pipeline might not be finished,” he said. “We are worried about these sanctions, and we think it is important for the European gas supply nevertheless.”
Nord Stream 2 is meant to carry gas directly to Germany and Central Europe, circumventing traditional transit countries such as Ukraine and Poland. The debate over the pipeline has further strained relations between Berlin and Washington, where sanctions have strong bipartisan support in Congress.
In July, US Secretary of State Mike Pompeo warned companies to “get out now, or risk the consequences”.
Uniper’s chief financial officer Sacha Bibelot described the move as “perfectly normal risk management”.
Uniper would not disclose the size of the loan it gave to Gazprom, but said it had already been paid out. The five energy companies that helped finance the project committed to contributing up to €950m each, with Gazprom financing the remainder of the pipeline.
Nord Stream 2 has only 160km of underwater pipeline left to build to reach its receiving station in northern Germany, but has been plagued by legal challenges and sanctions.
Despite concerns over the Nord Stream 2 project and the economic crisis in the wake of the coronavirus, Uniper said operating profit in the first half of the year rose from to €691m from €308m in the same period last year. The company expects full-year operating profit of about €900m. Mr Schierenbeck called the company “crisis-proof” in the pandemic.