Dusseldorf The Düsseldorf-based energy group Uniper is under a lot of pressure given the crisis with Russia. “If no more gas came from Russia, Uniper and other resellers would have to buy gas on the market at extremely high prices in order to be able to still supply customers,” says analyst Ingo Becker from Kepler Cheuvreux, describing the dilemma. According to industry circles, Uniper could then get into serious difficulties.
Hardly any other company has such long and close ties to Russia as Uniper and its predecessor companies. Uniper was only spun off from Eon in 2016 and at that time also took over the Russian business in addition to conventional power generation and trading.
What was once the most powerful gas importer in Europe, Ruhrgas, which was already importing natural gas from Russia in the early 1970s, has also been merged into Uniper. For this reason, Uniper repeatedly emphasized the decades of reliable partnership with Russia, which even survived the Cold War. Now, for the first time, reliable gas supplies are seriously in question.
A delivery stop would not only hit Uniper hard because of its history. The company is still one of the largest gas traders in Europe. It currently has long-term gas supply contracts with a volume of 370 terawatt hours of gas, of which almost 200 terawatt hours come from Russia. That corresponds to about a fifth of Germany’s annual gas consumption and, according to analyst Becker, is a “significant amount” for Uniper. In addition, Uniper operates huge gas storage facilities in Germany, as well as gas power plants. A delivery stop would massively affect Uniper’s business model.
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In view of the tense situation, CEO Klaus-Dieter Maubach has told the financial news service Bloomberg that Uniper would immediately tap into its storage facilities in the event of a disruption in Russian supplies. This would also trigger government intervention within days that could bail Uniper out. However, the situation is perceived less optimistically on the financial market. Uniper shares have fallen by around 50 percent in the past month alone. There are even warnings in financial circles that a Russian gas supply freeze could wipe out the company’s stock market value.
When asked about the assessments of the financial market, a Uniper spokesman only referred to a statement from the group at the beginning of the week. It said, among other things, that Uniper’s current earnings forecast from mid-February will remain unchanged for the time being.
Russia business could collapse completely
However, the company is already certain of at least one very high loss: Uniper had to write off its financial stake in the Nord Stream 2 pipeline. The loan that Uniper granted to Nord Stream 2 AG and the interest due so far, which the company is not now receiving, are worth almost a billion euros together and are now lost for Uniper.
In addition, a large part of Uniper’s previous business is already in question: the company has so far been active directly in Russia through its subsidiary Unipro and operates coal and gas-fired power plants there. Actually, Uniper had been trying to sell the Russian subsidiary Unipro for a long time. It is now completely unclear how this will continue.
The Ukraine war calls part of the business model into question.
(Photo: imago images/ITAR-TASS)
In financial circles, it is expected that the income that Uniper has received from its Russian business so far will be extremely impaired and will possibly disappear completely. Here, too, Uniper refers to the announcement at the beginning of the week. It states that the sales process for Unipro has been halted for the time being and will resume as soon as possible.
Unipro generated adjusted earnings before interest and taxes (EBIT) of 230 million euros last year. This corresponds to almost a fifth of Uniper’s operating profit. Unipro is currently continuing to operate its power plants, but will no longer receive any new money from Uniper for the time being.
State intervention in gas supply stop
However, Uniper’s business in Germany is still working. “As long as gas comes from Russia, the currently high gas prices are not a problem for Uniper, because Uniper passes on gas from long-term supply contracts with Gazprom to customers with a margin,” says analyst Becker.
But a complete gas supply stop is becoming more and more likely. In a speech broadcast on Russian state television on Monday evening, Deputy Prime Minister Alexander Novak openly threatened for the first time to stop gas supplies through the Nord Stream 1 Baltic Sea pipeline .
For example, Ottmar Edenhofer, director of the Potsdam Institute for Climate Impact Research (PIK), recently called on Germany and Europe to stop using gas from Russia. Meanwhile, the US announced on Wednesday that it would stop importing Russian oil, and Great Britain will phase out oil imports at the end of the year.
A similar step for gas would be problematic for Europe. The end of the heating period is now approaching, and according to calculations by the Brussels think tank Bruegel, the remaining gas supplies in Europe should be sufficient to cover the demand for the rest of the heating season, even in the event of unfavorable weather developments and a failure of all Russian supplies.
More about energy prices
But Europe would then not be able to store gas on a large scale for the coming winter. For the time being, Europe would probably not be able to cope with LNG alone, i.e. liquefied natural gas from the USA. An evaluation by the market research company ICIS shows that even if all available liquefied natural gas terminals were fully utilized, just 40 percent of European natural gas demand could be covered.
This situation is also threatening for Uniper. With its global trade, the group made sales of around 182 billion euros last year. In contrast, European and Russian power generation together only contributed around 28 billion euros.
The fact that Uniper is such a large gas trader could also help the company in an emergency. Because it makes the company an important contact for government representatives, as Uniper plays a central role in supplying Germany with natural gas. A Uniper spokesman says: “There is a good exchange with the federal government.” It can be heard from industry circles that there is regular exchange about how possible supply bottlenecks could affect and how Uniper, as one of the largest gas traders in the country, is dealing with this situation could.
Kepler-Cheuvreux analyst Becker says with regard to a delivery stop: “Since in such a case there would probably be no gas available on the market, one would have to reckon with state intervention in the energy market.”
Regular exchange with the federal government
According to Uniper, it would still be able to cope with a brief interruption. Then flexible assets and gas storage could largely compensate for the failure. If there is no gas from Russia for a longer period of time, not only would Uniper itself have problems, but the “stability of the German gas system would also be endangered”. In such a case, the Federal Ministry of Economics would most likely have to declare a state of emergency. The Federal Network Agency would then decide which consumers are primarily supplied with gas.
Uniper probably hopes to be released from its delivery obligations in an emergency and not have to buy the missing quantities at expensive prices on the stock exchange. The notice states: “We assume that such measures and events would replace the existing contractual agreements.”
The MDax group and the German state are therefore dependent on each other to a certain extent: Uniper is trying to comply with the federal government’s request to bring as much liquefied natural gas as possible onto the market, as company circles say. “The federal government has declared the goal of diversifying gas purchases. We want to make a contribution to this,” says the company. Even if you have not received any specific instructions from the federal government.
State support for Uniper in the event of a gas supply freeze could theoretically come from both Germany and Finland. Although Uniper is a German company based in Düsseldorf, 76 percent now belong to the Finnish state-owned company Fortum. However, it is unclear whether Uniper can actually rely on state support in the event of a gas supply stop. When asked about such plans, Uniper simply explains: “We are not aware of any of this.” However, it can be assumed that the company is hoping for this.
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