Uniper may have to write off Nord Stream 2 loans if the pipeline fails

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FRANKFURT / DÜSSELDORF (Reuters) – German utility Uniper said Tuesday that it may have to cut a loan on the proposed Nord Stream 2 gas pipeline if the project collapses in the face of US sanctions.

FILE PHOTO: The logo of the German energy supplier Uniper SE is shown on March 10, 2020 in the company headquarters in Düsseldorf. REUTERS / Thilo Schmuelgen

“The pressure has intensified further,” said CEO Andreas Schierenbeck in an analyst meeting to discuss the results of the first half of the year. Uniper said earlier Tuesday that recent US sanctions efforts had increased the risk that the project could stall.

“The worst case scenario would of course be if (Nord Stream 2) was never completed and then of course the question is, can we get our money back or not,” he said, adding that he expected the pipeline to continue as planned.

The German and Russian foreign ministers who held talks in Moscow supported his view. Heiko Maas from Germany insisted that it was Germany’s “sovereign decision” to choose where to get its energy from.

The shares of Uniper, which is majority-owned by the Finnish company Fortum, fell by 1.7%. The group also said operating profit more than doubled in the first half, citing its gas business as well as payments from the capacity market.

Together with Austrian OMV Wintershall DEA, Uniper is one of the donors of the EUR 9.5 billion (US $ 11.2 billion) Nord Stream 2 pipeline, which is owned by Russian Gazprom [WINT.UL], Royal Dutch Shell and France’s Engie.

It has committed to finance up to 950 million euros of the project costs. Investments made by Uniper to date are not subject to the current sanctions regime, said Schierenbeck.

But US resistance to the pipeline is growing. US President Donald Trump has already signed a sanctions law delaying construction of the project, and lawmakers are considering further action.

At the center of the conflict are US concerns that Nord Stream 2, which would connect Russian gas fields with Western Europe, would increase the energy dependency of the Moscow region. Supporters, including Germany, say the gas is needed.

($ 1 = 0.8488 euros)

Additional reporting by Vera Eckert and Thomas Escritt; Edited by Thomas Seythal, Louise Heavens and Barbara Lewis

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