Germany’s Uniper on the ‘brink of insolvency’ after €12bn loss

German utility Uniper reported a €12.3bn first-half loss, saying it had become a “pawn” in the Ukraine conflict pushed to the “brink of insolvency” by a dramatic drop in Russian gas deliveries.

The loss by Europe’s biggest importer of Russian gas is one of the largest by a German company, eclipsing Bayer’s €10.5bn loss in 2020.

Uniper chief executive Klaus-Dieter Maubach warned on Wednesday that Europe faced a grim energy outlook this winter, saying the gas supply crisis made it “almost impossible” to predict the group’s performance in the second half of the year.

“We do assume that Gazprom, if it wanted to, could considerably increase its gas deliveries through Nord Stream 1,” he said, adding that gas prices had gone haywire because of “concerns about the reliability of energy supply”.

Germany, which before the Ukraine war bought 55 per cent of its gas from Russia, is trying to avoid rationing energy this winter. Despite the shortfall of Russian deliveries, its gas storage facilities have been filled to 77.3 per cent capacity, in line with the government’s plans. The government aims to bring the level to 95 per cent by November.

Uniper, majority-owned by Finnish utility Fortum, last month received a €15bn bailout from the German government, which will take a 30 per cent stake and also provide loans to prevent a collapse. Uniper’s share price has lost more than 81 per cent this year, bringing its market capitalisation down to €2.8bn.

The company has been squeezed by a drop of up to 80 per cent in Russian gas deliveries since June, forcing it to buy expensive supply on the spot market to meet contractual obligations to provide gas to clients in Germany including 100 regional utilities owned by municipalities.

From October, Uniper will be able to pass on 90 per cent of the higher costs to consumers. The company warned that it would nonetheless continue to generate operating losses for the coming 18 months but hoped it could “return to positive territory” in 2024.

Over the past 12 months, gas prices in Germany have risen more than fivefold to €200 per megawatt hour. Uniper said that since Russian gas supplies through the Nord Stream 1 pipeline started to dwindle in mid-June, it has suffered an average daily loss of €60mn. It has also taken a €2.7bn impairment on its stake in defunct Russian gas pipeline project Nord Stream 2 and a €4.9bn loss on its derivatives position.

“In Germany . . . there is not a single energy company that such a development would not bring to its knees,” Maubach said, adding that Uniper had already drawn more than half of a €9bn credit line from state-owned German lender KfW.

Under the Uniper bailout, the company will be able to access up to €7.7bn in government support. Rating agency Standard & Poor’s has labelled Uniper “a government-related entity” since the rescue.