(Natural News) As energy prices continue their ascent, energy firms in the European Union (EU) are taking on more debt to offset these costs.
Bloomberg reported on July 18 that the companies’ overall debt has jumped by more than half since the pandemic’s onset in early 2020. The total amount of debt now stands at €1.7 trillion ($1.74 trillion).
Furthermore, Bloomberg noted that the firms raised €45 billion ($45.93 billion) in bonds and €72 billion ($73.48 billion) during the first half of this year alone.
Earlier in July, Uniper – one of Germany’s largest energy supply companies – asked for government intervention. It cited “extreme financial pressure” caused by reduced Russian natural gas deliveries flowing through the Nord Stream pipeline.
Uniper may need as much as €9 billion ($9.19 billion) to stay afloat, but it is not the only company that may need a bailout. Czech energy provider CEZ is also asking its government of up to €3 billion ($3.06 billion) in aid.
The energy shortage, caused by Russia pushing back against Western sanctions imposed in response to the February 24 attack on Ukraine, has reverberated throughout the EU.
It has led to an eight-fold increase in the prices of benchmark natural gas prices over the past 18 months. Meanwhile, oil prices have increased by roughly 50 percent over the past year. These have subsequently worsened inflation.
In response, German banks braced themselves for a possible influx of defaults in relation to the energy crunch by setting aside substantial funds.
BNP Paribas Germany CEO Lutz Diederichs said his country’s economy – the largest in Europe – is projected to fall into a recession. He added that lenders will be required to bolster corporate loans with more capital. Deutsche Bank CEO Christian Sewing, meanwhile, warned that a complete loss of access to natural gas from the Nord Stream pipeline would force “a deep recession” that would hit the German economy hard.
Gazprom force majeure declaration signals end for EU energy supply
Russian state-owned natural gas company Gazprom declared force majeure on gas supplies to Europe, exacerbating the bloc’s energy supply woes.
According to Reuters, Gazprom made the declaration in a July 14 letter, saying that the force majeure retroactively applied on gas supplies beginning June 14. The letter added that given the declaration, it can no longer guarantee gas deliveries to several countries. The letter came eight days before the scheduled July 22 shutdown of the Nord Stream pipeline for annual maintenance work. (Related: Gas flows from Russia to Germany halted INDEFINITELY following Gazprom force majeure declaration.)
Several companies importing Gazprom products were notified of the state-owned firm’s force majeure declaration. Uniper, which was among the companies notified, said Gazprom’s move was unjustified. RWE, another company importing Russian gas, confirmed that it was notified of the force majeure but did not comment.
Gazprom earlier reduced natural gas flows to the EU, citing in particular the delay of a gas turbine for the Nord Stream pipeline. Turbine supplier Siemens Energy took the key pipeline component back to Canada for maintenance work.
According to Russian newspaper Kommersant, the turbine was sent to Germany by plane on July 17 following the completion of repairs. In case there are no problems encountered with customs and logistics, the paper said it will take another five to seven days for the turbine to reach Russia. The German Ministry of Economic Affairs and Climate Action, meanwhile, said it could not provide details of the turbine’s whereabouts.
But whether or not the gas turbine is reinstalled, the force majeure declaration means natural gas supply would not return to normal levels anytime soon.
“This sounds like a first hint that the gas supplies via NS1 will possibly not resume after the 10-day maintenance has ended,” said ABN Amro Senior Energy Economist Hans Van Cleef.
“Depending on what ‘extraordinary’ circumstances [Gazprom has] in mind in order to declare the force majeure, and whether these issues are technical or more political, it could mean the next step in escalation between Russia and [the rest of] Europe.”
Visit EnergySupply.news for more stories about the energy shortage in Europe.
Listen to Health Ranger Mike Adams below as he explains how Gazprom’s reduction in natural gas supply accelerates Germany’s collapse.
This video is from the Health Ranger Report channel on Brighteon.com.
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BLACKMAIL: Canada may be withholding Nord Stream gas turbine until Germany signs LNG contract.
German banks prepare for companies to default on loans due to energy crunch.