Europe energy crisis: The worst is yet to come, German utility giant Uniper warns as Russia shuts off key gas supplies indefinitely
- Germany's Uniper warned natural gas prices could jump even higher as Russia chokes supply.
- The utility giant's CEO underscored the need to address the impact of soaring prices on consumers.
German utility giant Uniper warned natural gas prices could surge even higher, as Russia cuts its supply to Europe.
Speaking to CNBC on Tuesday, Uniper's CEO Klaus-Dieter Maubach underscored the vital need to address the impact of soaring prices on consumers, especially as millions of people rely on gas to heat their homes during the winter.
"Look, the worst is yet to come," Maubach said, noting that he wanted to educate policymakers about the dire outlook.
"What we see on the wholesale market is 20 times the price that we have seen two years ago — 20 times," he continued, calling for an open discussion about how to fix the problem.
European natural gas prices have increased 300% this year as rolling gas cuts from Russia squeeze supply and push up prices. Dutch TTF futures, Europe's benchmark natural gas price, were down 10.5% to 225 euros ($222.68) per megawatt-hour on the ICE exchange at last check Tuesday.
They shot up 36% the day prior on news that Russia had indefinitely suspended gas flows to Europe via the key Nord Stream 1 pipeline. But before that, Russia cut flows to 20% of its capacity, and closed the pipeline down for 10 days for annual maintenance.
European leaders have accused Russia of "weaponizing" its energy in response to sanctions and boycotts imposed on the nation after it invaded Ukraine. Now, countries like France, Germany, and Italy are scrambling to find ways to stockpile energy before winter hits.
Germany, which has partnered with Russia on the fuel front for about half a century, has been hit the hardest in Europe's energy crisis. The relationship between Uniper and Russia's state-energy giant, Gazprom, will remain impaired even if Russia ends the war, Maubach said.
"I think this partnership is broken and I don't think that we can reestablish that in the next weeks, months and years to come. So, we are focusing on replacing Russian gas," he said. Gas prices are unlikely to come down immediately when the war concudes, he added.
"There will be a burden for our consumers, also for the industry, in the next years to come," he said.
As part of Germany's transition away from Russian gas, Uniper recently fired up a mothballed coal-fueled power plant to generate electricity. But with low water levels in the Rhine River after record summer heatwaves, Germany's fuel switch stands to face some obstacles.
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