Europe burns cash to help companies deepen energy crisis

BERLIN/LONDON, Sept 21 (Reuters) – Germany nationalized gas importer Uniper (UN01.DE) on Wednesday and Britain capped companies’ wholesale electricity and gas costs as Europe keeps lights on and off this winter. The latest move by the heater to run as the Ukrainian war escalates.

Russian President Vladimir Putin has exacerbated price pain in global energy markets by announcing a partial Russian military mobilization, pushing up oil and gas prices and threatening to further tighten global fuel supplies.

European gas and electricity prices have soared as Russia slashed fuel exports in retaliation for Western sanctions over its invasion of Ukraine, leaving consumers facing sky-high bills and utilities facing a liquidity crunch.read more

“We have stepped in to stop business failures, protect jobs and limit inflation,” said UK finance minister Kwasi Kwarteng.

While many businesses grapple with higher bills, more than 20 UK electricity providers have collapsed, many of them collapsed, as government price caps prevent them from passing on the full impact of soaring fuel costs to households.read more

European gas prices rose on Wednesday to 212 euros per megawatt hour (MWh) following Putin’s announcement, still below this year’s peak of about 343 euros but more than 200 percent higher than a year ago. Oil prices rose 2%.

The European Union, which once relied on Russia for 40% of its gas needs, has been racing to find other supplies.

“(Russia’s) moves could lead to calls for more aggressive action against Russia on Western sanctions,” said Warren Patterson, head of commodities research at ING.

Germany’s Uniper, which once relied heavily on Russian gas imports, has been one of the most high-profile victims, facing a liquidity crunch as Russia shut off taps and sent prices soaring.

After efforts to inject billions of euros in cash into the utility proved insufficient, the government agreed to buy the remaining shares owned by Finland’s Fortum (FORTUM.HE) to keep the company afloat, giving the state a 99% stake .read more

‘Do everything possible’

“The state will … do everything possible to keep companies stable in the market at all times,” German Economy Minister Robert Habeck said, announcing Uniper’s move and other measures to help Germany avoid energy rationing this winter.read more

Uniper said the agreement involved a capital injection of 8 billion euros ($7.94 billion), a move that brings the government’s total capital injection to date to at least 29 billion euros.

Germany is more dependent on Russian gas than many other countries in Europe, and is mainly supplied via the Nord Stream 1 pipeline. Russia halted flow through the pipeline, accusing Western sanctions of hampering operations. European politicians called it an excuse and said Moscow was using energy as a weapon.

The German government has placed Gazprom Germania, a subsidiary of Russian oil company Rosneft (ROSN.MM), under trusteeship, a de facto nationalization. Smaller companies are also seeking help.

Fortum Chief Executive Markus Rauram said the sale of the company’s stake in Uniper was a painful but necessary step, adding that the Finnish government-majority company lost about 6 billion euros on its Uniper investment.

The flow of Russian gas to Europe through Ukraine continues, but at lower levels. Gazprom (GAZP.MM) said 42.4 million cubic meters of gas would be shipped to Europe via Ukraine on Wednesday, in line with recent days.

Eastbound gas flows from Germany to Poland via the Yamal-Europe pipeline stopped on Wednesday, while supplies from Russia through Ukraine remained steady.read more

In the U.S., Democratic and Republican senators proposed on Tuesday that U.S. President Joe Biden’s administration would impose secondary sanctions on international banks to strengthen G7 nations’ plans to cap Russian oil prices.read more

Moscow has said that if such a cap were imposed, it would cut off all oil and gas flows to the West.

The move by U.S. lawmakers came hours after Putin ordered Russia to mobilize for the first time since World War II, warning the West that Moscow would respond with its vast nuclear arsenal if it continued what he called “nuclear blackmail.”read more

Some countries have banned imports of Russian crude and fuel, but Moscow is maintaining its revenue by increasing crude sales to Asia.

Reporting from the Reuters offices; Writing by Ingrid Mayland; Editing by Edmund Blair

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