Uniper, the highest-profile corporate victim of Europe’s energy crisis so far, reported a 12.3 billion euro loss ($12.5 billion) due to Russian gas supply cuts, saying it had become a “pawn” in the energy standoff between the European Union and Moscow.
Germany’s largest importer of Russian gas needed a 15 billion euro government bailout last month after Russia drastically cut flows, forcing Uniper (UN01.DE) to buy gas elsewhere at much higher prices.
The bailout has laid bare Germany’s reliance on Russian gas, which accounted for around 55% of the total last year, and the costs of switching to alternative sources to keep on powering Europe’s top economy.
More than half of Uniper’s first-half loss was caused by reduced supplies from Russia, which has been locked in an economic conflict with the West since its invasion of Ukraine.
“For globally active foreign oil and gas companies, such losses might be bearable. In Germany, on the other hand, there is not a single energy company that such a development would not bring to its knees,” Chief Executive Klaus-Dieter Maubach said.
“We at Uniper have de facto become a pawn in this conflict.”
Maubach said Uniper was examining legal steps against main supplier Gazprom (GAZP.MM), which has declared force majeure regarding deliveries, an argument Uniper disputes.
Underscoring Uniper’s commitment to deliver agreed volumes of gas, Maubach warned Europe’s energy crunch was far from easing and gas supply in coming winter remains extremely challenging.
Uniper expects a mid to high single digit billion euro operating loss this year and said 2023 would mark a transition year before the group could exit the “loss zone” in 2024.
Apart from equity provided by the state and bigger loans from state-lender KfW (KFW.UL), help will also come via a gas levy that lets utilities pass on most of the costs of more expensive gas to customers from October, Uniper said.
Uniper, whose shares fell 8%, said this would significantly reduce losses from the fourth quarter onwards.
Moscow has cut flows via the Nord Stream 1 pipeline to just a fifth, blaming faulty or delayed equipment.
Berlin has said this is a pretext and Maubach said Uniper shared the government’s view that Gazprom could increase supplies via the pipeline if it wanted to or use alternative routes.
The first-half loss also includes 2.7 billion euros in impairments related to the cancelled Nord Stream 2 pipeline, which Uniper backed financially, in addition to write-downs on its Russian business Unipro (UPRO.MM), which it still plans to sell.
“The most urgent task for Uniper is to find alternative gas supplies,” Third Bridge analyst Allegra Dawes said, adding she expected deliveries of liquefied natural gas (LNG) via a planned Uniper-led terminal in Wilhelmshaven by the first half of 2023.
Maubach said the group was in contact with Canada and other suppliers about additional LNG deliveries.
As part of the state bailout, Germany will take a 30% stake in Uniper and has pledged 9 billion euros of credit lines via KfW, 5 billion euros of which have been drawn.
The bailout also includes an undefined government backstop should losses from gas purchases to offset lower Russian deliveries exceed 7 billion euros, which Maubach said would not dilute shareholders further.
“This will prevent a chain reaction that would do much more damage. Our top priority now is to swiftly implement the stabilisation package,” he said.
Uniper, which expects the package to be approved at an extraordinary general meeting in the autumn, said it needed to wait for a clear signal from the European Commission on how it thinks about the bailout first.