Uniper takes €1bn Nord Stream 2 hit and signals shift from Russian gas

Uniper is taking a €1bn hit from writing off its exposure to the suspended Nord Stream 2 gas pipeline, following fellow investors in the project in turning its back on Russia after the invasion of Ukraine

The German utility disclosed late on Monday it had written off €695mn in loans to Nord Stream 2 plus €292mn in accrued interest payments, adding that it would take an annual hit of €100mn as it forgoes future interest payments on the loan.

Uniper, majority-owned by Finnish utility Fortum, is one of Europe’s biggest importers of Russian gas, with 200 terawatt hours of long-term supply contracts.

It is among five European companies that lent money to Russia’s Gazprom to build the contentious Nord Stream 2 link between Russia and Germany. Three of the other companies — German group Wintershall Dea, UK-listed Shell and Austria’s OMV — have made similar moves since Berlin froze the project a fortnight ago.

Authorities in Switzerland, where Gazprom-controlled Nord Stream 2 is incorporated, said this month the company was facing insolvency. Its website is now offline.

Uniper’s share price, which has fallen by about 40 per cent since Russia launched its attack on Ukraine last month, was up 6 per cent in morning trading on Tuesday.

Uniper chief financial officer Tiina Tuomela said the company did not at present expect disruptions to gas supplies from Russia, which last year accounted for 55 per cent of all German natural gas imports.

“At this point in time, we assess the probability of [a possible interruption of Russian gas supplies] as low,” she said. “Currently, all parties seem committed to continue gas supplies and there are no indications of a restriction of supply so far.”

Should flows from Ukraine be interrupted, she added, European gas imports from Russia could be sourced via “alternative routes”.

Uniper said it would “gradually” shift from natural gas to greener alternatives and would not sign “new long-term supply contracts for natural gas with Russia”.

It also said it wanted to build an LNG terminal in Wilhelmshaven on Germany’s North Sea coast and would stop sourcing coal for power plants from Russia by the end of this year.

The company announced it had shelved the planned sale of its Russian utility Unipro “due to the current situation”. The German group holds an 84 per cent stake in the Moscow-listed company with 11 gigawatts in generation capacity and 4,300 employees.

Uniper said it was “currently impossible to predict how potential Russian sanctions could affect Unipro’s business and financial situation”.

In 2021, Unipro accounted for a fifth of Uniper’s total operating profit. The German company had decided to sell Unipro at the end of 2021.

“This process has been halted for the time being and will be restarted as soon as it is feasible,” the company said, adding it had frozen new investments in Russia and “will not transfer any funds to Unipro until further notice”.