September 24, 2022

BERLIN (AP) – The German government said Wednesday it has agreed to nationalize the country’s biggest gas importer, Uniper, expanding state intervention in the industry to prevent energy shortages resulting from Russia’s war in Ukraine.

The deal with Uniper builds on a rescue package agreed in July and includes an 8 billion euro capital increase to be financed by the government. As part of the deal, the government will get a 99% stake in Uniper, which until now was controlled by Finland’s Fortum. The Finnish government has the largest share in Fortum.

German Economy Minister Robert Habeck said that the agreement is necessary because of the importance that Uniper has on the German gas market. It still needs to be approved by the European Commission.

Uniper supplies about 40% of all gas customers in Germany, and before the war it bought about half of its gas from Russia.

The company’s losses increased as Russia cut natural gas supplies to European countries that support Ukraine. Prices for the fuel needed to heat homes, generate electricity and power factories have soared, sparking fears of business closures, downsizing and recession as the weather turns cold.

Read more: Europe relies on Russian gas. A hard winter is upon us amidst the fear of interruption

European countries have struggled to counter spiraling prices and have prioritized securing their energy supplies for the winter, including filling up their natural gas storage facilities. Just last week, Germany also took control of three Russian-owned oil refineries before an embargo on Russian oil comes into effect next year.

Habeck noted that Germany was able to fill its gas storage facilities to over 90% capacity in preparation for the winter heating season despite Russia halting gas deliveries through the Nord Stream 1 pipeline. Wholesale gas prices have almost halved since the summer, he said.

“It means that, overall, we handled the situation pretty well,” Habeck said. “But for Uniper, the situation became much more dramatic and much worse.”

Citing Uniper’s importance to the German gas market, Habeck said the government decided to nationalize the company “to ensure security of supply to Germany.”

Chancellor Olaf Scholz insisted that Germany is in a good position to get through the winter with enough energy, pointing, among other things, to new liquefied natural gas terminals that will start operating in the coming months.

In a separate move last Friday, his government announced that German authorities were taking control of three Russian-owned refineries to ensure energy security. Two subsidiaries of Russian oil giant Rosneft are being placed under Mueller’s Federal Network Agency.

Rosneft participates in about 12% of Germany’s oil refining capacity, importing several hundred million euros worth of oil each month, according to the government, which said the trusteeship was originally intended to last six months.

The grid regulator was already in charge of Gazprom’s former German subsidiary in April, a decision the government said was necessary to bring “order to conditions” at the company after the Kremlin-controlled parent company abruptly severed ties with the unit.

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