The German government said Wednesday that it has agreed to nationalize the country’s biggest natural gas importer, Uniper, expanding state intervention in the industry to prevent an energy shortage resulting from Russia’s war in Ukraine.
The deal with Uniper builds on a rescue package agreed to in July and features a capital increase of 8 billion euros (dollars) that Germany will finance. As part of the agreement, the government will gain a 99% stake in the energy supplier, which until now was controlled by Finland-based Fortum. The Finnish government has the largest stake in Fortum.
Economy Minister Robert Habeck said the deal was necessary because of the significance that Uniper plays in the German gas market. It still needs to be approved by the European Commission, the European Union’s executive arm.
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 have mounted as Russia has reduced natural gas supplies to European countries supporting Ukraine. The cuts have contributed to high prices for the fuel needed to heat homes, generate electricity and power factories, raising fears of business closures, rationing and a recession as the weather turns cold. Uniper has been forced to buy gas at far higher prices on the market to fulfill its supply contracts.
European countries have scrambled to counter the price spiral and prioritized securing their energy supplies for winter, including by filling their natural gas storage. Just last week, Germany also moved to take control of three Russian-owned oil refineries before an embargo on Russian oil takes effect next year.
Habeck noted that Germany has managed 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 prices for gas have almost halved since the summer, he said.
“This means that, as a whole, we have coped quite well with the situation,” Habeck said. “But for Uniper, the situation has become significantly more dramatic and significantly worse.”
Gas prices are still at a historically high level. Citing the importance of Uniper for the German gas market, Habeck said the government had chosen to nationalize the company “to ensure security of supply for Germany.”
Uniper shares were down by a third on the Frankfurt exchange Wednesday compared with the previous day.
Chancellor Olaf Scholz has insisted that Germany is well-placed to get through the winter with enough energy, pointing to new liquefied natural gas terminals expected to start work in the coming months, among other things.
In a separate move last Friday, his government announced that German authorities were taking control of three Russian-owned oil refineries to ensure energy security. Two subsidiaries of Russian oil giant Rosneft are being put under the administration of the national network regulator.
Rosneft accounts for about 12% of Germany’s oil refining capacity, importing oil worth several hundred million euros (dollars) every month, according to the government, which said the trusteeship was initially due to last for six months.
The network regulator already was put in charge of Gazprom’s former German subsidiary in April, a decision that the government said was necessary to bring “order to the conditions” at the company after the Kremlin-controlled parent company abruptly cut ties with the unit.
Environmentalists said the nationalization of Uniper should prompt the government to steer the company away from fossil fuels.