Uniper: the pain from Germany’s gas crisis will be widely shared
Disruption caused by the loss of Russian gas supplies is weighing heavily on the Düsseldorf-based group
Two years ago, Berlin responded to Lufthansa’s “existential” emergency with a €9bn bailout. German chancellor Olaf Scholz is now dusting down the same playbook, according to weekend reports. That is a measure of the pain Moscow’s supply squeeze is inflicting on Uniper, Germany’s largest buyer of Russian gas.
Düsseldorf-based Uniper has 200 terawatt hours of long-term supply contracts with Russia, but since mid-June it has received only 40 per cent of what was due. Forced to cover the supply shortfall in the spot market, the business — spun out of Eon in 2016 — is losing about €35mn a day, according to Bernstein. Its cash is draining fast though it has yet to draw on a €2bn credit facility agreed with the state-owned KfW bank.
This is unsustainable; clients will be obliged to pick up the extra costs. But the government risks being sued by angry customers if it allows suppliers to unilaterally reprice contracts. It is considering sharing the pain across all energy users.
Imposing a special levy would probably require new legislation, implying significant delays. Even if it could be rushed through by July 8, the last day that Germany’s parliament sits, Uniper would have racked up losses of €870mn since mid-June. Compare that with Uniper’s February forecast of at least €1bn of 2022 ebit, although it is less than half the €2bn of market value lost since Russia started cutting supplies at that time.
Other utilities have suffered more modestly. RWE’s Russian gas contracts are less than 2 per cent of Uniper’s, suggesting potential losses of just €17mn by mid-July. While Eon itself has minimal exposure, Finland’s Fortum acquired Eon’s 47 per cent stake in 2018, and later upped its holding to 78 per cent. Forced to provide its own €8bn credit facility in January, its acquisition has proved a costly headache.
Uniper’s travails make a mockery of its name, a portmanteau of “unique” and “performance”. But there will be nothing exclusive about the disruption caused by the loss of Russian gas supplies. Germany’s gas consumption has dropped 15 per cent in the first five months of this year, but more than half of that can be attributed to mild temperatures.