Trader Uniper, Germany’s biggest natural gas importer and a busy charterer of ships, is seeking state aid.
The Duesseldorf-based company requested “stabilisation measures” from its home country’s federal government on 8 July.
Under the proposed rescue, Uniper would be granted credit lines of €2bn ($2.04bn) with state development bank KfW and the federal government would become a substantial shareholder.
Under the plan, Uniper would also be allowed to pass on natural gas price increases to customers plan.
Uniper is heavily exposed to Russia and had to buy natural gas at higher prices since Russia's state company Gazprom reduced supplies to Germany.
According to its chief executive officer Klaus Dieter Maubach, the company is burning cash to a daily tune of about €50m ($51m). ”This isn't sustainable for long,” Maubach told journalists in a press conference.
Uniper submitted the state aid request after weeks of talks with the German government and on the day that lawmakers passed legislation allowing aid to energy companies.
The request aims at protecting the company's credit rating while distributing the relevant costs fairly between the company's own shareholders, the government and consumers, Maubach said.
In view of falling natural gas imports from Russia after 14 June, Uniper warned customers it would „markedly“ increase natural gas prices very soon and occasionally also cut provisions.
Uniper is a major international energy company and commodity trader that operates roughly 33 gigawatts (GW) of generating capacity in Europe and Russia, which makes it one of the world’s largest power producers.
Uniper trades about 360 LNG cargoes a year. In May the company signed a letter of intent to charter two Dynagas-managed floating storage and regasification units on behalf of the German government.
Berlin gave on 4 July early approval so that construction work for the project, Germany's first LNG terminal, can begin at Wilhelmshaven. The Uniper-led project includes onshore and seaward port infrastructure.
Up to 7.5 billion cubic meters of natural gas per year are to be handled via this terminal. This is about 8.5% of Germany's current gas demand per year.
Uniper is also one of Germany’s largest publicly listed energy supply companies. Together with its main shareholder Fortum, it is Europe’s third-largest producer of zero-carbon energy.
Fortum, an energy company whose biggest single shareholder is the Finnish state, is said to agree to the rescue plan.
Fortum is in talks with the German government about reorganising Uniper's structure with the aim to set up an energy security cell within Uniper, which would belong to the German government.