Berlin saves Uniper but now Russia really has the fate of Europe in its own hands

Even the implicit reassurance represented by a return to operation, albeit with fewer operations, from Nord Stream 1 was not enough.. Uniper’s liquidity crunch denounced by the vice-chairman of the supervisory board was so definitive that it forced the German government to cross the Rubicon for what is, in effect, a disguised nationalization. This comes after the frankness of Paris against the EDF, which returned under the wing of the state for 9.7 billion euros.

The Finnish state energy company Fortum (the main shareholder of the facility) and the German state announced yesterday that the latter will acquire 30% of Uniper shares, and subscribe to approximately 157 million new registered ordinary shares with a nominal value of 1.70 euros. For a cash equivalent of approximately 267 million euros. In addition to, Berlin has committed to provide additional capital of up to 7.7 billion euros in exchange for the issuance of mandatory transfer instruments – if necessary – to meet potential losses. Finally, German state bank KfW will provide Uniper with an additional €7 billion to support liquidity by increasing the existing line of credit, which is going from €2 billion currently to €9 billion.

But this is not enough yet. The German government has also committed to introducing a cost-absorption mechanism that covers 90% of the losses resulting from the increases For the volume of gas replacement caused by the cuts made by Moscow since October 1. In view of what has been agreed, Fortum’s current stake in Uniper (equivalent to approximately 80%) will be diluted to 56% at the time of the initial capital injection, while maintaining the Finnish company as the majority shareholder and the required submission to Uniper’s consolidation as a subsidiary. In short, danger A weekend that saw Berlin call for a decision on the brink in Lehman Brothers style It was only avoided for 24 hours. Indeed, it was deliberately expected to avoid further dangers.

All is well? Is everything resolved? Not right. These two graphs show us,

Comparison of Nord Stream flows arriving in Germany and storage mobilization
Source: Bloomberg

The first crystallizes the market’s reaction to the news. If the first rumors about the deal were relaunched before Bloomberg He had actually raised Uniper’s stock by 7%, Once the details were read, the market rejected the agreement and sent the stock -16% to as low as 6.95 to close at 7.46 from 10.33 from the opening.. In any case, if it is not outright rejection, at least three subjects should be fixed in September. The reason is rooted in the second image: With Nord Stream running at 40% of capacity and German storage at 65% of the total compared to the 90% requested by November 1Already, market prices worst case scenario.

that by saying, If any geopolitical or diplomatic disagreement leads to a gas dispute with Moscow, what will happen to German reserves for the winter?, given a government that has already put $15 billion on the plate but could be called into a real hemorrhage of public money, in the event of an upward price explosion in the spot market? If it is really Berlin intervened to avoid a bankruptcy that could finance a hitherto unsustainable crisis in the energy sectora new stop for Nord Stream, even if it is temporary or limited to a further decrease in streams, It will instantly generate a snowball effect on the sector. And on Uniper accounts.

In this sense, The market is looking anxiously at what is happening in the gas quartet that connects Ottawa to Brussels to Berlin and Moscow.. there quarrels On the famous Siemens turbine necessary precisely to improve Nord Stream’s operations towards Germany was never completed, so much so that the Kremlin decided it was time to denounce what was previously reported Reuters How Nonsense. that by saying, The turbine will be banned in transit between Germany and Russia, after receiving a special exemption from sanctions by Canada, the country in which the Siemens facility is located. According to the news agency, Moscow has not yet given the green light for the shipment from Germany, While Russia asserts that it is the German company that has not yet sent any official document to the EU authorities To notify the shipment.

Apparently a misunderstanding solvable. But he is thinking of burdening the climate and causing fear that the situation will deteriorate again The debate within the European Union over a 15% reduction in gas use until the spring of 2023, precisely in order to prepare for the elimination of energy dependence in Moscow. Indeed, a kind of European solidarity on the common stocks towards the difficulties that Berlin faces. However, Spain and Greece have already opposed their rejectionensuring for Vladimir Putin a new European Achilles heel that will turn into a target.

Simultaneously with the announcement regarding Uniper, the Kremlin has in fact announced that it will not supply oil to countries that give the green light to the price ceiling, Because Moscow does not intend to sell at a loss. And this graph

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Year-on-year equivalent spending of Chinese energy imports from Russia
Source: Bloomberg

It shows how Moscow, meanwhile, has found a wealthy alternative client to lend its energy to. Perhaps at a reduced price but in huge quantities and volumes, and above all, According to a cooperation agreement worth gold in a punitive context and the renewal of muscular polarity. Attention, in short. Because what might appear to be a crisis-avoidance agreement, even if signed, could turn out to be a detonator for something worse. It’s regular. And if Germany falls into recession, Italian subcontractors of machinery and components can lower their shutters for the time being.