suspension of Nord Stream 2 could cost Engie almost 1 billion euros

987 million euros. This is the sum of the French company Engie’s investment in the Nord Stream 2 gas pipeline. Approximately one billion euros of funding, which puts it in a stalemate. Because the military preparations for the invasion of Ukraine, and finally the attack by the Russian army last week, hastened the fate of this plant with an annual capacity of 55 billion m3, which was ready for operation. This $11 billion 1,230 km subsea pipe was completed at the end of 2021 but has yet to go online pending German certification.

“Engie, as a lender, is exposed to a maximum of €987 million in credit risk, which could materialize in particular in the event of a bankruptcy filing,” the group said in a press release.

Questions about Engie’s participation in this project have multiplied in recent days. On Tuesday morning, French Economy Minister Bruno Le Maire, questioned about the activities of hexagonal giants TotalEnergies and Engie in Russia, estimated that now “fundamental problem that needs to be worked on with any person close to the Russian authorities.

As for Angie, Bruno Le Maire believed that the topic “a bit different”because the French group turned their stake in the project into “ready”. However, this did not prevent Engie shares from falling on the stock market on Tuesday after the minister’s speech: by the end of the day, Engie shares had lost more than 13%. This Thursday morning, shares fell another 4.5% to 11.58 euros.

“Our commercial ties with Russia are connected with contracts for the supply of gas” as well as “Recently we have increased purchases of gas of Norwegian origin and LNG”Angie said in a statement, emphasizing that he had no “there is no industrial activity in Russia.”

Cascading failure

As for Nord Stream 2, Berlin has finally announced the suspension of the pharaonic platform where it intended to make its energy transition. A decision that revived the debate about the need for nuclear power across the Rhine, while coal consumption is on the rise again.

READ ALSO Expansion of nuclear energy: Taboos removed in Germany in the face of the Russian threat

This project was co-financed by several European energy groups: in addition to Engie, OMV, Wintershall Dea, Uniper and Shell invested in this pharaonic infrastructure.

If the French group calls for the moment only “risk”, several project participants have already announced the specific consequences of the suspension of the project.
The operator of the German-Russian gas pipeline Nord Stream 2, based in the Swiss canton of Zug, has filed for bankruptcy, hit by retaliation.

Energy company Wintershall Dea, one of the German groups involved in the Nord Stream 2 gas pipeline, for its part, announced on Wednesday that it would write off its investment of one billion euros in the project, frozen indefinitely, and also abandoned any new project in Russia. Direction “decided not to promote or implement new gas and oil projects in Russia and to record an impairment of around one billion euros in connection with the financing of Nord Stream 2., according to a press release. The group will also “Immediately suspend payments to Russia.”

The acute issue of sanctions against Russian gas

As sanctions pile up against Russian companies, the suspension of Nord Stream 2 seems rather symbolic. Because in the field of energy, and although part of Europe depends on Russian gas, the response is less direct. As evidence, while the European Union has excluded seven Russian banks from the Swift network, Russian giant Gazprom has remained on the sidelines. IN despite the current crisis, Russia today continues to pump this fossil fuel through pipelines to Europe, which is in no hurry to stop these exchanges. “Ican’t do without it“, Patrick Pouyanne, CEO of TotalEnergies, even confirmed last week.

READ ALSO | Russian gas: why Europe is trapped

But Angie also points out that he “would fit in everything” to possible sanctions that will affect the continuation of supplies from Russia, which make up 40% of gas imported to Europe.

“In these exceptional circumstances, regulators and governments will need to take action in the face of the very high supply pressures expected by 2022/23 and the group will work closely with the authorities,” indicates a group. Angie points out: “to use(r) every opportunity possible to continue to secure its supply” and recalls the existence of long-term contracts with a number of countries, in addition to Russia (Norway, the Netherlands, Algeria, the USA).