Photo Credit: Uniper
As long as Russia exerts pressure on gas supplies entering the nation, the gas issue in Europe will only worsen. As a result, prices increased dramatically and will do so for the remainder of the winter. German energy firm Uniper said that if the trend keeps up, the nation will suffer the most.
“I have said this a number of times now over this year, and I’m also educating policymakers. Look, the worst is still to come,” said Uniper CEO Klaus-Dieter Maubach.
“What we see on the wholesale market is 20 times the price that we have seen two years ago — 20 times. That is why I think we need to have really an open discussion with everyone taking responsibility on how to fix that,” the CEO added.
Supplies of Uniper are decreasing. As the largest German supplier of gas, the situation propelled prices through the roof. To aid the corporation with its difficulty, the government of Germany subsidized Uniper with 15 billion euros, or close to $14.9 billion.
The rescue agreement should help the corporation overcome its present challenges and stabilize its system. Meanwhile, Russia’s decision to halt supplies to Nord Stream 1 poses a new challenge to the corporation. As a result, Uniper’s stock dropped by 3.5% on Tuesday.
Gazprom, the energy giant operated by the Russian government, has already obstructed gas flows delivered to Europe via the main pipeline. The action caused suppliers to worry and may require several regions of Europe to store their supply until the winter.
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G7’s take on the issue
The severance of Gazprom with the nation came shortly after the G7 decided to cap the price of Russian oil as a sign of opposition to Russia’s conflict with Ukraine.
“We aim to align implementation with the timeline of related measures within the EU’s sixth sanctions package. [The initial price cap would be set] at a level based on a range of technical inputs,” stated the seven-membered block.
The US, Canada, Germany, France, Italy, the UK, and Japan make up the G7. The G7 said in a manifesto:
“To deliver on this commitment, today we confirm our joint political intention to finalize and implement a comprehensive prohibition of services which enable maritime transportation of Russian-origin crude oil and petroleum products globally – the provision of such services would only be allowed if the oil and petroleum products are purchased at or below a price (“the price cap”) determined by the broad coalition of countries adhering to and implementing the price cap.
The price cap is specifically designed to reduce Russian revenues and Russia’s ability to fund its war of aggression whilst limiting the impact of Russia’s war on global energy prices, particularly for low and middle-income countries, by only permitting service providers to continue to do business related to Russian seaborne oil and petroleum products sold at or below the price cap. This measure would thus build on and amplify the reach of existing sanctions, notably the EU’s sixth package of sanctions, ensuring coherence through a strong global framework.”
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Gazprom and Uniper in the future
Germany’s declaration of disapproval might make it challenging for Uniper to resume its relationship with Gazprom. Since 1970, a relationship has been created between the two parties. However, the cooperation has already ended, according to the CEO of Uniper, and there are no longer any plans for the business to make amends with the Russian supplier in the coming days, weeks, or years. Maubach added that it is imperative that Uniper find another gas supplier to take the place of its Russian partner.
Currently, Uniper is having trouble keeping up with the energy demand. One of the largest pipelines owned by Gazprom recently had to be shut down for maintenance on one of its compressors. As a result, the planned maintenance raised rates. Uniper, in the meantime, is working to overcome its current problems and anticipates finding a new energy source now that they have severed its relations with Gazprom.