Germany nationalizes energy giant Uniper as Russia cuts gas supplies

The German government on Wednesday agreed to nationalize Uniper, as it strives to keep the industry afloat in the wake of the global energy crisis.

Having already agreed in July to bail out the largest gas importer with a 15 billion euro ($14.95 billion) bailout deal, the country will now buy a 56% stake in Finnish Fortum for 0.5 billion euros. The German state is set to own about 98.5% of Uniper.

“Since the agreement on Uniper’s stabilization package in July, Uniper’s situation has rapidly and significantly deteriorated; as such, new measures have been agreed to resolve the situation,” Fortum announced in a statement Wednesday morning.

Uniper is Germany’s largest importer of gas, and has been pressured by a significant reduction in gas flows from Russia, which has driven up prices.

Russia’s state-owned energy giant Gazprom earlier this month indefinitely halted gas flows to Europe via its Nord Stream 1 pipeline, in a move Uniper CEO Klaus-Dieter Maubach told CNBC that would lead to exacerbate the company’s suffering.

Fortum will unconsolidate Uniper from the third quarter of 2022, the company said Wednesday, while Fortum’s €4 billion loan will be repaid to Uniper and the Finnish company will be freed from the parent company’s €4 billion guarantee.

“Given the current conditions in the European energy markets, and recognizing the gravity of the Uniper situation, divesting Uniper is the right step to take, not only for Uniper but also Fortum,” said Marcus Raoromo, CEO of Fortum.

“The role of gas in Europe has changed drastically since Russia attacked Ukraine, and so has the heavy gas portfolio. As a result, the feasibility study for an integrated package is no longer viable.”

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