ENERGO: German energy major Uniper to quit Russia, writes off Nord Stream 2 loans

German energy major Uniper said in a statement on March 7 it will not sign any new contracts for the supplies of Russian natural gas, while still receiving fuel under existing contracts. Uniper is one of the largest buyers of Russian natural gas in Europe, according to Bloomberg.

As followed by bne IntelliNews, after unprecedented sanction pressure on Russia for the military invasion of Ukraine, reports claimed that oil traders are staying clear of purchasing Russian oil and the US is considering an embargo on oil imports. At the same time, global energy majors such as British Petroleum, Exxon and Equinor have announced pulling out of the country.

Notably, Uniper also said it plans to restart the divestment process of Unipro Russia utility major. Uniper controls 83.7% of Unipro. In 2020, Finland's Fortum reached an agreement to acquire 20.5% in German Uniper from hedge funds Elliott and Knight Vinke for €2.3bn, making it the largest shareholder in the company with a 70.5% stake. 

In addition, Uniper will recognise an impairment loss of its loans to the Nord Stream 2 AG pipeline operator of Russian gas giant Gazprom of €987mn ($1.1bn). One of the foreign financiers of the blocked pipeline, the company decided to record a full impairment loss on the project financial claim.

To remind, Nord Stream 2’s fate is up in the air since Germany’s government last week halted the certification process necessary for its commercial launch.

According to Bloomberg, the German major relies on Russia for more than half of its natural gas under long-term contracts and its power generation business in Russia accounted for almost 25% of earnings in 2021.

"Due to the existing contracts with Russia or Russian companies, we bear a special responsibility not only for ourselves, but also for large parts of German industry and many people in Germany and across Europe," Uniper CEO Klaus-Dieter Maubach said in the statement. 

"Two things need to be done now: maintain the existing energy flows, and at the same time find ways and means to make the gas supply for Germany and Europe more diverse," he added.

As for Unipro Russia, Uniper plans to divest its majority 83.7% stake "as soon as it is feasible", and will also halt any new investments or funds to the company. 

Uniper's parent Finland-based Fortum, which has about 3.4 GW of wind and solar investments in Russia including in joint ventures with the bank GPB and the Russian Direct Investment Fund, has also announced halting new ventures in the country.