September 25, 2022

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Germany agrees to bail out energy giant Uniper as Russia cuts gas supplies

Germany agrees to bail out energy giant Uniper as Russia cuts gas supplies

Uniper is in talks with the German government about a possible rescue plan.

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On Friday, Germany agreed to a bailout Uniper With a 15 billion euro ($15.24 billion) rescue deal, the embattled energy company became the first major victim of Russia’s natural gas pressure.

The rescue package will see the German government take a 30% stake in Uniper.

The energy company was the first in Germany to sound the alarm about high energy bills and provided a Rescue request for government support advance this month. As Germany’s largest importer of gas, it has been hit hard by a significant drop in pipeline flows from Russia, which has driven up prices.

In a statement, Finnish majority owner Fortum said Uniper and the German government had agreed on a “comprehensive stabilization package” to provide it with financial relief.

“We are living through an unprecedented energy crisis that requires stringent measures. After intense but constructive negotiations, we have found a solution that in an acceptable way meets the interests of all parties involved,” Fortum President and CEO Marcos Rauramo said in the statement.

“We were driven by the urgency and the need to protect the security of European supplies in time of war.”

Russian gas supplies to Europe have plummeted since its unprovoked invasion of Ukraine earlier this year — and subsequent sanctions imposed by the West on Moscow.

Uniper has received “a fraction of the contracted gas volumes” from Russian giant Gazprom since mid-June, according to Fortum, meaning it has been forced to buy gas at much higher spot market prices. Fortum added that this had serious consequences for Uniper’s financial position.

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CNBC’s Sam Meredith contributed to this report.