Germany Completes Uniper Nationalization

Germany decided to nationalize utility company Uniper after the government’s earlier multi-billion bailout failed to save the country’s top gas importer and Putin sent oil prices higher by announcing a partial Russian military mobilization. The German government agreed to buy the remaining stakes, which was owned by Finland’s Fortum, in Uniper to secure its operations and keep its business afloat, as a latest effort to keep electricity and gas flowing in Europe’s biggest economy.

After Russia cut gas exports to the continent in response to Western sanctions, European gas and power prices have skyrocketed this year and left consumers with record high energy bills and utilities with a liquidity shortage.

German Economy Minister Habeck said the government would do everything possible to keep companies stable on the market.

Alongside surging European gas prices, crude oil jumped more than 2% on Wednesday after Putin announced a partial military mobilization, escalating the war in Ukraine and raising concerns of even tighter global energy supplies.

Putin’s move could lead to calls for additional and more aggressive sanctions against Russia from the West.

After buying Fortum’s stake, the German state will hold about 99% of Uniper.

The agreement involves a capital injection of €8 billion. The German government’s capital injection bring the total bailout package to least €29 billion.

Russia, which used to supply around 40% of Europe’s gas needs before its invasion of Ukraine, has cut flows through Nord Stream 1, citing sanctions hampering operations to keep it running. The EU calls that a pretext and says Moscow is using energy as a weapon.

Russia flows via Ukraine have continued, but at a reduced rate. Gazprom said it would ship 42.4 million cubic meters of gas to Europe via Ukraine on Wednesday, in line with recent days.

Eastbound gas flows via the Yamal-Europe pipeline to Poland from Germany were halted on Wednesday, while Russian supply via Ukraine held stable.

Meanwhile in the United States, some Republican and Democratic senators on Tuesday proposed that the Biden administration use secondary sanctions on international banks to strengthen plans for price cap by G7 countries on Russian oil.

Moscow has said it would cut all oil and gas flows to the West if such cap was implemented.

The move by U.S. lawmakers came hours before Putin ordered Russia’s first mobilization since World War II, warning the West that if it continued what he called its “nuclear blackmail” Moscow would respond with its vast arsenal.

Several countries have banned imports of Russian crude and fuel, but Moscow has managed to maintain its revenues through increased crude sales to Asia.

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