Uniper SE said it expects the financial blows it took last year to replace Russian natural gas with costlier spot supplies to impact operations until the end of 2024, at which point it’s unlikely to require equity injections and credit from the German government.
Germany’s largest gas buyer was bailed out by the government last year. It exhausted capital and went into debt trying to fulfill customer contracts with replacement supplies as Russia slowly shut off gas deliveries to Europe following its invasion of Ukraine.
CEO Klaus-Dieter Maubach said the “burden of gas replacement procurement costs has put our company in an extremely difficult situation.” He called 2022 “the most difficult year” in the company’s history. The German government ultimately authorized $26.7 billion of capital for the company, of which roughly $5.8 billion had been utilized by the end of last year.
While Uniper cautioned that the cost to replace Russian gas would continue to impact its finances this year, CFO Tiina Tuomela said the steep decline in global gas prices has softened the blow.
Uniper was forced to find new supplies as European prices hit record highs last year, topping $100/MMBtu at one point over the summer. Ample LNG deliveries, a warm winter and a lack of competition from Asian buyers, have seen prices come crashing down. In Europe, prices have been trading near $15 at some of their lowest points since 2021.
Tuomela said Uniper anticipates future losses related to replacement costs of about $6.3 billion due to the slide in prices. That’s compared to previous projections made last year for losses of $32 billion.
“We must be aware that in future quarters, too, Uniper’s earnings will depend to a significant extent on the amount of gas replacement procurement costs,” she said. “These costs, in turn, depend largely on the price of gas.”
Uniper’s management team stressed that government support has allowed it to rebalance German supplies and strengthen European energy security a year after war in Ukraine broke out and severely disrupted gas flows.
“The exceptionally swift construction of Germany’s first liquefied natural gas terminal in Wilhelmshaven has demonstrated that Uniper is a reliable partner for complex infrastructure projects,” Maubach said. “We’ve returned more than 2 GW of reliable generating capacity to the German power market to reduce gas consumption during the current tight supply situation.”
Uniper reported a full-year net loss of $20.4 billion (minus $35.34/share), compared to a net loss of $4.3 billion (minus $12.18) in 2021 that was largely the result of hedging transactions and positions. The 2022 results included $14.1 billion of additional costs to replace Russian natural gas supplies.
