Worst of Energy Crisis ‘Still to Come’, German Gas Giant Uniper Warns

The Dusseldorf-headquartered natural gas and electrical power company was bailed out in July amid the raging energy crisis facing Germany and the rest of Europe. President Vladimir Putin warned Wednesday that Russia might simply stop selling its energy abroad if its economic interests were threatened out of politically motivated malice.

European officials and ordinary Europeans should accept the reality that the energy crisis pummeling the region isn’t going anywhere anytime soon, Uniper CEO Klaus-Dieter Maubach has warned.

“I have said this a number of times now over this year and I’m educating also policymakers. Look, the worst is still to come. We’ve seen gas prices rising since the beginning of this year. Utilities have increased at prices [of] 40 percent every quarter…What we see in the wholesale market is twenty times the prices that we have seen two years ago. twenty times,” Maubach told CNBC on Tuesday.

Maubach suggested that the energy crunch does have a potential upside, however.

“Even if the [Ukraine crisis] was hopefully over anytime soon, we do not expect gas prices to come down immediately. And hence there will be a burden for our consumers, also for the industry going forward over the next years to come. It’s bad news for the consumers, I have to say. It’s good news on the other hand for the transition that is desperately needed. Because high gas prices would mean that we could benefit in a certain way to transit into a carbon-neutral future,” Maubach said.

Asked whether Uniper could restart cooperation with Russian gas giant Gazprom after the end of the Ukraine crisis, the CEO suggested that the partnership was “broken.”

“I don’t think that we can reestablish that in the next weeks, months and years to come. So we are focusing on kind of replacing Russian gas. Yesterday we signed a contract with Woodside, an Australian player. We buy cargos that they sold to us from the US market to bring additional LNG to Europe. That’s what we’re focusing on to basically fix the undersupply situation we have in Europe,” he said.

Maubach suggested it was a “mistake” on the part of Uniper, other European energy companies and governments not to build additional LNG import capacity, and said that the existing infrastructure is already operating at 100 percent capacity, hence the supply shortages.

Uniper received a generous multi-billion euro bailout from the German government in July in exchange for a 30 percent stake in the company. Before the escalation of the Ukrainian crisis, Uniper was Germany’s largest importer of Russian natural gas.

The West generally and Europe in particular have faced a dramatic surge in energy prices and inflation rates unseen since the 1970s after officials in Brussels and individual countries announced a dramatic reduction in the purchase of Russian oil, gas, coal, and electricity supplies in a bid to punish Moscow for its military operation in Ukraine.

Russian President Vladimir Putin commented on the energy crunch crisis in a speech in Vladivostok on Wednesday, saying that European leaders undermined their own economic potential through their shortsighted policies.

“Receiving natural gas from Russia, the economies of the leading European countries had obvious competitive advantages of a global nature for decades. If they think that they do not need such advantages, it does not bother us in any way because the need for energy resources in the world is very large,” Putin stressed.

Putin also dismissed recent claims made by Western officials and media that Russia is using energy as a “weapon,” emphasizing that Moscow is supplying “as much energy as our partners need.” He added that sanctions and the shutdown of pipelines by countries including Poland, Ukraine and Britain are responsible for the halt in Russian pipeline-based energy deliveries to Europe.

Putin also commented on the G7 nations’ recent push for a ‘price cap’ on Russian energy supplies, calling it an “absolutely stupid” idea and warning that Moscow might simply cut off all energy deliveries to these nations if its economic interests were threatened for politically motivated reasons.