German energy giant Uniper said on Friday it is being forced to draw natural gas from storage facilities, reducing supplies needed for the winter as Europe experiences a severe heat wave, CNBC notes.
The utility told CNBC that reducing natural gas volumes from its own storage facilities was necessary “in order to supply our customers with natural gas and ensure Uniper’s liquidity.”
Finnish majority owner Fortum said last week that Uniper had submitted a bailout application to the German government after facing extreme financial distress due to gas shortages and soaring prices.
Finnish majority owner Fortum said last week that Uniper had submitted a bailout application to the German government after it faced extreme financial distress due to gas shortages and soaring prices.
Germany’s economy ministry said on Friday there was no timetable yet for state aid, according to Reuters.
Speaking to reporters at a press conference on July 8, Uniper CEO Klaus-Dieter Maubach warned that a reduction in gas supplies from its warehouses was likely due to a “huge reduction” in imported gas from Russia.
And all this at a time when Europe is plagued by an extreme heat wave, resulting in temperatures exceeding 40 degrees Celsius in several countries. Drought and wildfires have been recorded in Spain and Portugal, and heatwave temperatures have spread to the UK and France.
As high temperatures spread across the region, European officials remain focused on preparations for the return of cold winter weather. Governments are scrambling to fill warehouses with natural gas supplies to provide households with enough fuel through the winter.
Difficult months are coming
Uniper was the first German energy company to sound the alarm over soaring energy bills following Russia’s invasion of Ukraine. The company has received only 40% of Russian quantities in recent weeks and has been forced to source replacement quantities at significantly higher prices.
In addition, the annual scheduled maintenance of the Nord Stream 1 pipeline – the European Union’s largest piece of natural gas import infrastructure – has fueled fears of further disruptions to natural gas supplies.
It is recalled that Russia suspended deliveries through the Nord Stream 1 pipeline on July 11. Maintenance work is scheduled to last until July 21.
Germany fears that Russia may continue its energy war after the planned end of maintenance on the Nord Stream 1 pipeline for “political reasons”. The Kremlin, for its part, has rejected claims that it is using oil and gas to exert political pressure on Europe.
Dan Yergin, vice president of S&P Global, pointed out that Russian President Vladimir Putin outlined Moscow’s energy strategy at the St. Petersburg International Economic Conference last month. Putin “spoke of economic difficulties as a result of energy problems in Europe leading to social conflicts, which will lead to the rise of populist parties that will be more favorable to Russia. And, he said, a change in the elites in Europe,” Yergin stated.
Putin’s goal “is to break up the alliance,” Yergin said. “So the next few months are going to be really difficult. It’s going to be a race to see if Europe can be able to have enough natural gas to get through the winter and Russia will, I think, do everything they can to to make sure it doesn’t get there.”
Yergin said he expects Europe’s energy problems this winter to “resonate around the world.”
Source: Capital
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