EU countries try to keep energy companies afloat

Belgium, (Brussels Morning Newspaper) EU member states are providing aid to energy companies to help them stay afloat as energy prices continue to soar.

Rising prices are pushing up margin requirements, which affects solvency of energy companies, according to Reuters reporting on Friday.

Several EU member states have announced plans to provide guarantees and loans to companies struggling with solvency, while EU energy ministers discussed plans on Friday to rein in soaring prices.

At the end of August, German energy company Uniper called on the German government to provide it with more aid, raising the bailout bill to 19 billion euro, while its Finnish counterpart Fortum noted it was discussing solutions to its solvency problems with the Finnish government.

Also at the end of last month, Austria provided a line of credit worth 2 billion euro to Vienna to help Wien Energie power utility to stay afloat.

Earlier this week, Finland and Sweden announced plans to provide more than 30 billion euro in guarantees to energy companies.

On Thursday, Denmark presented plans to support energy companies with guarantees worth more than 10 billion euro.

Gas importer faces problems

Earlier today, German natural gas company VNG, the third largest importer of natural gas in the country and the largest importer of gas from Russia, called on the government to help it stay afloat.

“Until the start of the Russian war of aggression, VNG was a healthy corporate group contributing to the security of supply of gas in Germany,” the company noted in a statement.

“The impacts of the Russian war on the energy markets placed VNG in an increasingly critical financial situation through no fault of its own,” it added. German Ministry for Economic Affairs and Climate Action announced it would review VNG’s application.

As the company faces steep decline of Russian gas supplies, it is forced to buy natural gas on the spot market at record-high prices.

VNG pointed out that potential damage from two contracts with Russian energy company Gazprom “lies in the low single-digit billion euro range.”

The company closed one gas supply contract with Gazprom directly and the other with Gazprom’s German subsidiary Sefe, which came under German trusteeship earlier this year.