German gas importer VNG seeks state aid as energy crisis deepens

General view of a pressure gauge at gas trading company VNG AG in Bad Lauchstaedt, Germany July 28, 2022. REUTERS/Annegret Hilse/File Photo

FRANKFURT, Sept 9 (Reuters) – VNG (VNG.UL), one of Germany’s largest importers of Russian natural gas, on Friday asked the government for help to stay afloat, the latest European energy firm to seek support from state due to supply cuts from Moscow. .

Although the company did not disclose any details, this could theoretically include a request for partial state participation in accordance with stabilization measures covered by Germany’s security of energy supply law.

“Until the start of the Russian Aggression War, VNG was a healthy business group that contributed to the security of gas supply in Germany,” said VNG, which is 74% owned by German utility EnBW. (EBKG.DE).

“The impacts of the Russian war on energy markets have placed VNG in an increasingly critical financial situation through no fault of its own,” VNG added.

The German government will consider the request and is working to stabilize the business, economy ministry spokespersons said, adding that Berlin was not aware of any requests for additional help from the companies. energy. Read more

“We are on a very, very good path and this will soon be resolved,” German Economy Minister Robert Habeck said on Friday in Brussels of talks between the government and VNG.

Like Uniper (UN01.DE), which won a government bailout in July, now totaling 19 billion euros ($19.2 billion), VNG has been hit by a sharp drop in Russian gas supplies, forcing it to fill the void in the spot market at much higher prices.

RUSSIAN CONTRACTS

Shares of EnBW, which are themselves majority state-owned save for a small float, pared losses and traded up 0.9% at 1337 GMT after plunging as high as to 10.3% earlier in the day.

VNG, which also counts local utilities and municipalities among its shareholders, has two long-term Russian gas contracts with a total volume of 100 terawatt hours (TWh): one, representing 35 TWh, is directly with Gazprom (GAZP .MM) and will expire at the end of the year.

This contract will result in losses of around 1 billion euros in 2022, even if a tax on gas, which will allow gas companies to pass on the price surge to customers from October 1, is taken into account, has said VNG, adding that this loss alone would still be bearable.

The challenge is the supply remaining under contract with Sefe, formerly known as Gazprom Germania, which came under German trusteeship after Gazprom abandoned it in April.

“This contract has not been regularly fulfilled since mid-May,” VNG said. “With the support of the German government, means have been sought in recent weeks to reach a definitive settlement. However, this does not appear to be feasible in the near future in an economically viable form for VNG.”

EnBW last month estimated potential damages from both contracts “in the low single-digit billion euro range.”

“Ongoing discussions between VNG AG with its shareholders and the federal government on options for stabilizing the company are continuing in parallel,” EnBW said.

($1 = 0.9907 euros)

Reporting by Christoph Steitz; additional reporting by Christian Kraemer, Alexander Ratz and Rachel More in Berlin; Editing by Miranda Murray, Edmund Blair and Tomasz Janowski

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