BERLIN (AP) — Natural gas supplier Uniper said on Tuesday it was in “final talks” for Germany to nationalize the company, stepping up government intervention in the oil and gas industry as Russia’s War in Ukraine causes a energy crisis.
Uniper’s expansion July bailout deal would involve an 8 billion euro (dollar) capital increase that the government would finance and involve it taking a majority stake now held by Finnish company Fortum, the company said. The Finnish government holds the largest stake in Fortum.
Uniper’s losses increased as Russia has cut its natural gas supplies to European countries supporting Ukraine. Prices have soared for fuel needed to heat homes, power generation and power plants, raising fears business closuresrationing and recession as the weather gets colder.
European countries have rushed to counter the price spiral and have prioritized securing their energy supplies for the winter, including filling their storage with natural gas. Just last week, Germany too moved to take control of three Russian oil refineries before an embargo on Russian oil comes into force next year.
Uniper’s initial bailout called for the government to take a roughly 30% stake in the company after Russian cuts forced it to buy gas at much higher market prices to fill its supply contracts.
Under the potential new deal, “it is contemplated that the federal government will obtain a significant majority stake in Uniper,” said the company, which talks confirmed on a possible nationalization last week. He added that “the final agreement has not yet been concluded”.
As the government tries to stabilize Uniper, officials say Germany’s gas storage facilities are now more than 90% full ahead of the winter heating season despite Russia suspends gas supplies via the Nord Stream 1 gas pipeline.
The head of the national grid regulator, Klaus Mueller, tweeted on Monday night that Germany had “taken another step” and that stored gas will help manage any potential emergency and return to the market.
He warned that “nevertheless, we must continue to save” gas.
The government enhanced storage requirements in July after Russian state-owned Gazprom began cutting gas supplies through Nord Stream 1, citing alleged technical problems. German officials dismissed this explanation as a cover for a political decision to drive up prices and create uncertainty.
Germany introduced a requirement for storage to be 75% full by September 1 and raised targets for October and November to 85% and 95%, respectively, from 80% and 90%. The November target is roughly equal to the amount of gas Germany used in January and February of this year, when temperatures were relatively mild.
Before the cuts began, Russia accounted for just over a third of Germany’s natural gas supplies.
Chancellor Olaf Scholz says that Germany is well placed to get through the winter with enough energy, pointing out new liquefied natural gas terminals should begin work in the coming months, among others.
Moreover, last Friday, his government announced that the German authorities were taking control of three refineries belonging to Russia to ensure energy security. Two subsidiaries of Russian oil giant Rosneft are under the administration of Mueller’s Federal Network Agency.
Rosneft accounts for about 12% of Germany’s oil refining capacity, importing oil for several hundred million euros (dollars) each month, according to the government, which has said the conservatorship was initially expected to last six months.
The network regulator has already been tasked with Former German subsidiary of Gazprom in April, a move the government said was necessary to bring “order to the terms” of the company after the Kremlin-controlled parent company abruptly severed ties with the unit.
Geir Moulson, Associated Press