German-based Uniper is moving ahead with a request for a government bailout after weeks of liquidity constraints.
The company, which relies on Russian flows of natural gas, has been struggling with cash flow as it’s been forced to enter the spot market for supply in response to Moscow cutting supplies flowing through the Nord Stream pipeline. Uniper is seeking additional debt relief and wants the German government to increase its stake in the company. Berlin changed some legislative rules on Thursday and Friday that would allow the government to further aid companies through the choke in energy supplies.
Uniper’s struggles is part of a broader concern in Europe that energy supplies will continue to prove difficult to ensure after Russia’s invasion of Ukraine upended the market. Moscow has pulled back flows by as much as 60% and the EU is working to build up stores ahead of the winter months.
Uniper is Germany’s largest importer of gas, making the company largely afflicted by the slowdown in flows from the Kremlin. The surge resulting surge in prices in other markets has all but drained Uniper’s cash. Germany has accused Moscow of purposely slowing flows in retaliation for stringent sanctions, using so-called scheduled maintenance of the Nord Stream as an excuse for the cut back. The next scheduled round of maintenance is set for July 11 to July 21.
But even before Russia’s invasion of Ukraine, Uniper faced a stiff cash crunch. The company tapped the German government to borrow roughly 10 billion euros to cover margin calls in response to growing volatility in the energy market.