German gas importer VNG seeks state aid as energy crisis deepens

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

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FRANKFURT, Sept 9 (Reuters) – VNG (VNG.UL), one of Germany’s biggest importers of Russian natural gas, on Friday asked the government for help to stay afloat, the latest European energy company to seek the state aid in response to the Russian fall. Provisions.

“Until the start of the Russian Aggression War, VNG was a healthy business group contributing to the security of gas supply in Germany,” said VNG, which is 74.21% owned by the utility. German 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 said.

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Germany’s economy ministry will consider the request, a spokesperson said.

Like Uniper (UN01.DE), which in July agreed to a government bailout now totaling 19 billion euros ($19.18 billion), VNG has been hit by a massive drop in Russian gas supplies, l forcing them to purchase replacement volumes at exorbitant prices. in the cash market.

Shares in EnBW, which itself is effectively state-owned except for a small float, fell 5.6%.

VNG 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 biggest problem is due to a 65 TWh contract with Sefe, formerly known as Gazprom Germania, which was abandoned by Gazprom in April and subsequently placed under German supervision.

“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 said last month that the total potential damages of these two contracts “are in the low single digit range of the billion euros”.

“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)

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Reporting by Christoph Steitz, additional reporting by Christian Kraemer in Berlin; Editing by Miranda Murray and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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