Uniper CEO Condemns US Sanctions
German energy firm Uniper's CEO Klaus Schafer has accused US politicians of talking “not just about Crimea but about the economic interests of the US” and vowed: "I will do everything to protect Uniper against such sanctions.” He acknowledged their potential impact remains unclear.
But he asserted that US LNG is “not a solution for Germany or Uniper” because the company needs to keep all supply options open.
Uniper’s role with four other west European gas groups in co-financing Nord Stream 2 was a “European project, subject to European law,” he told an August 8 press briefing for its 2Q results: "It is important that the German government takes a strong position.”
Asked if Uniper had a Plan B if sanctions cripple NS2’s realisation, Schafer said the pipe project is important for the company and that he did not want to speculate on alternatives. It’s worth remembering, however, that Uniper and its four western co-financiers of the Gazprom-led NS2 venture were forced earlier this year to back down from their original plan of taking equity in the venture.
Uniper to date has had no direct contacts with the US administration over the sanctions or NS2 but has instead engaged with the European Commission and consultants based in the US, said Schafer in response to a NGW question. But when the sanctions law is executed, companies like Uniper would take their case directly to Washington, he added.
Uniper and compatriot firm BASF, along with Shell, Austrian OMV and French Engie will each lend close to a €1bn each to the €9.5bn NS2 project. Engie CEO Isabelle Kocher said last month that US sanctions, before they were revised, were a way for the US “to try to favour its own gas” in Europe.
Schafer said his view of recent court rulings allowing Gazprom to use more Opal capacity, onshore Germany, was “positive but it’s not the final decision – but we hope the final decision will be similar.” Opal is effectively the onshore continuation of the NS1 pipeline.
He had opened the August 8 briefing by stressing that more infrastructure needs to be built, including additional pipelines from Russia and other regions “because Europe is importing 200bn m3/yr now and demand is going up. We can count on Russian gas; we have since the 1970s. Whether we can rely on LNG depends on demand in Asia and Latin America [is less certain]. If prices rise there, then tankers will head to those markets instead.”
Since US LNG exports began mid-2016 from Sabine Pass, only 17 of the 155 shipments had come to Europe, he said, claiming that US landed LNG prices in Europe are 5 to 8 euros per megawatt-hour of gas dearer than the ‘reference price’ in Europe.
Uniper’s net 2Q profit was €1.057bn, contrasting with a net loss of €3.885bn in 2Q2016, as it posted double-digit percentage growth in sales by its three core business areas.
Adjusted earnings before tax (Ebit) though declined by 18% to €930mn, as its European Generation business more than doubled earnings year on year to €284mn, and its International Power division went from a loss to earnings of €477mn – helped by receipt of a ruble 20.4bn (€326mn) insurance payout during 2Q 2017 following a fire in early 2016 at its Berezovskaya-3 power plant in Russia; the unit will not be back generating before 3Q 2019. Earnings (Ebit) from Uniper's Global Commodities segment, in contrast, were down by three-quarters to €262mn, but that was because 2Q2016 was buoyed by a one-off settlement payment by Gazprom to mitigate the effects of long-term gas pricing.
Uniper said its new guidance for adjusted Ebit in full year 2017 is €1bn– €1.2bn, a slight upward revision from its previous €0.9bn– €1.2bn guidance.
The $1.85bn sale by Uniper of its 24.99% interest in the Yuzhno-Russkoye field in western Siberia to OMV has yet to be completed; however when announced in March 2017 the target for completion was given as 2H2017.
Uniper was spun off in September 2016 from E.ON but the latter retains a significant minority interest.
Mark Smedley