Topline
The German government will take a 30% stake in flailing German energy company Uniper at a multibillion dollar price tag, the company announced Friday, in a massive bailout showing the dire consequences Europe faces as it weans off of Russian energy following the Ukraine invasion.
German Chancellor Olaf Scholz speaks during a press conference in Berlin on Friday.
Key Facts
Uniper is the top importer of Russian gas in Germany, according to the Wall Street Journal, and has struggled financially as Russia slows its stream of gas into Europe.
The bailout package will total about $15 billion, including a $7.1 billion increase in an existing credit line from state bank KfW and $7.8 billion in capital in exchange for nearly issued Uniper shares, Uniper said in a statement.
Uniper has struggled in recent months as it’s been forced to import more non-Russian gas at higher prices, and consumer gas and electricity prices in Germany and across Europe have risen to new highs this year.
The Uniper bailout follows a similar move from France, which said July 6 it plans to fully nationalize its largest electricity provider Electricity de France amid its own financial struggles spurred by the war.
Shares of Uniper fell 24.4% during Friday trading.
Key Background
The European Union agreed in May to a partial ban on Russian crude oil imports by the end of the year, but has thus far avoided a ban on natural gas imports in the country. Russia shut its Nord Stream 1 pipeline that delivers natural gas to Europe for 10 days before resuming shipments Thursday. The EU urged member countries this week to plan to scale back gas usage by 15% ahead of fears Russia will cut off gas deliveries.
Big Number
43%. That’s how much of the EU’s natural gas came from Russia in 2020, according to the bloc. Russia accounted for 29% of the EU’s crude oil imports in 2020.
Crucial Quote
“Uniper is in big trouble,” German Chancellor Olaf Scholz said Friday, according to Deutsche Welle. “It’s a company that’s of paramount importance for this country’s economy – for energy supplies to citizens. It has purchased gas from many suppliers, including Gazprom and Russia. These supplies, as we know, are no longer secure.”
Further Reading
Germany to Bail Out Utility Hit Hard by Russian Gas Shortfall (Wall Street Journal)
Russia Restarts Key Gas Pipeline To Europe After Fears Moscow Would Keep Taps Closed (Forbes)
France Will Nationalize Country’s Largest Utility Company Amid Deepening War-Induced Energy Crisis (Forbes)
Source: https://www.forbes.com/sites/dereksaul/2022/07/22/germany-bails-out-energy-giant-uniper-in-latest-sign-of-deepening-european-energy-crisis/