“Beixi No. 1” is about to be shut down, and the German energy giant asks for another 28 billion credit line

Image credit: Uniper

Reporter | Dai Jingjing

Under the high gas price, the German energy giant Uniper continued to run out of cash flow and once again applied for more financial support from the German government.

On August 29, local time, Uniper announced that the company has fully drawn down the credit line of 9 billion euros (about 62.262 billion yuan ) from KFW, and applied for an additional 4 billion euros (about 276.72 million yuan). RMB 100 million) to stabilize liquidity.

KfW is a German government-controlled policy bank that provides export credit and project financing for German companies.

In July, KfW has increased Uniper’s credit line from 2 billion euros to 9 billion euros.

On August 29, Uniper CEO Klaus-Dieter Maubach said that the request for the new credit line is to guarantee the energy supply the company has promised to customers and to stabilize the energy market.

Uniper is one of the largest importers of natural gas in Europe and plays a vital role in the energy security of Germany and Europe.

Uniper’s midstream gas business includes about 370 TWh (about 35 billion cubic meters of gas) long-term gas supply contracts, with about 200 TWh (about 19 billion cubic meters of gas) coming from Russia, according to Fortum.

Uniper is Germany’s largest importer of Russian gas, and Finland’s Fortum is its parent company, holding about 80% of the shares.

In 2021, Germany will import nearly 90 billion cubic meters of natural gas, of which about 55% will come from Russia.

Uniper has been forced to buy gas in bulk on the spot market in recent months to secure supplies as Russia has cut gas shipments. The company said that the current delivery gap in Russia is as high as 80%. Combined with high natural gas prices, Uniper has accumulated cash losses of more than 100 million euros per day.

In the first half of the year, Uniper has suffered a net loss of 12.3 billion euros (about 84.8 billion yuan).

In July, Uniper submitted an emergency aid application to the German government. After several rounds of discussions, the German government agreed to pay 267 million euros (1.7 euros per share) for a 30% stake in Uniper and provide up to 7.7 billion euros for the issuance of mandatory convertible securities.

However, the above-mentioned rescue plan still needs to be approved by the European Commission and the company’s shareholders before it can be formally implemented.

According to a statement issued by Gazprom on August 19, the important natural gas pipeline “Nord Stream No. 1” connecting Russia and Germany will be suspended from August 31 to September 2 for maintenance.

Since July 27, Beijing time, another turbine of “Beixi No. 1” has stopped operating, and the gas transmission volume of the pipeline has dropped to 20% of the full-load flow .

Nord Stream One is a natural gas pipeline connecting Russia and Germany, built and operated by Nord Stream. In 2021, Russia will export a total of 155 billion cubic meters of natural gas to the EU, and the transportation volume of “Beixi No. 1” will account for nearly 40%.

After the news came out, the settlement price of the Dutch TTF natural gas front-month futures contract, regarded as the “European natural gas price bellwether”, hit a record high for several consecutive days. This further increases Uniper’s burden of sourcing spot natural gas.

Uniper said the current gas price level is around 300 euros per megawatt hour (about 20.7 yuan per cubic meter) , which is more than six times higher than a year ago.

The German government has been trying to avoid a “Lehman moment” in the energy sector this year.

The “Lehman Moment” refers to the 2008 U.S. subprime mortgage crisis, when the bankruptcy of U.S. bank Lehman Brothers triggered the global financial crisis.

In June, German Deputy Chancellor and Minister of Economy and Climate Protection Habeck warned that if the gas supply gap is too large for energy suppliers to bear, the entire energy market has the potential to collapse.

Klaus-Dieter Maubach said that it is fully working with the German government to find a permanent solution, otherwise Uniper will not be able to continue to perform its energy supply function to Germany and Europe.