German gas company VNG on Friday became the latest European energy firm to seek government aid as reduced Russian pipeline flows pushed up energy prices and put its business under stress.
VNG, Germany’s third-largest gas importer and storage operator, asked for support to “avert further losses” and allow the group’s “business operations as a whole to continue”, it said in a statement.
Russia has slowly dwindled supplies of gas to Europe in the wake of the invasion of Ukraine, sending prices for the fuel soaring.
Unfulfilled contracts meant “gas quantities had to be procured at significantly higher prices” on the open market to meet supply arrangements with customers at “significantly lower, contractually agreed prices”, VNG said.
The cash crunch left VNG in “an increasingly critical financial situation through no fault of its own”, it said.
“Further supporting measures” were needed despite a government plan to allow gas companies to pass on some of their procurement costs from October 1, VNG said.
The precise nature of the government support was not specified.
Speaking at a regular press conference, a spokesman for the economy ministry said the government’s full “tool box” of measures was available.
These include the possibility of the federal government taking a stake in struggling energy companies, as well as extending lines of credit.
The government remained “in talks” with VNG, the spokesman said.
VNG, which supplies “approximately 400 municipal utilities and industrial customers” with gas, is majority-owned by the German utility EnBW, itself part-owned by the region of Baden-Wuerttemberg.
Uniper, Germany’s biggest importer of Russian gas, asked for government support earlier this year under the pressure of rising gas prices.
Officials in Berlin agreed to take a 30 percent stake in the struggling company as part of a bailout greed in July.
But a nine-billion-euro ($9-billion) line of credit extended by Berlin to the company to secure its financial position had already been exhausted by late August, Uniper said.
Finland, Austria and Switzerland have also extended support to prop up energy firms.