(Bloomberg) -- German utility Uniper SE said it doubts whether Russia's Nord Stream 2 pipeline will be able to resolve Europe's natural gas crisis.
It's “questionable” whether the long-awaited pipeline, which will bring gas directly to Germany, will be able to balance the market, Chief Financial Officer Tiina Tuomela said Friday. Uniper is helping to finance the new link, which is completed but awaiting approvals to start shipping.
“Clearly, it would help, but the picture is more complex,” Tuomela said on an analyst webcast after Uniper reported earnings. It “depends also on what kind of winter -- how demand, supply overall will develop.”
Gas prices in Europe have quadrupled this year as the economic rebound sent demand roaring ahead of supply. Limited shipments from Russia, together with intense competition for cargoes of liquefied natural gas, have hindered the region's ability to replenish depleted stockpiles ahead of the heating season.
“We saw in the third quarter very little LNG coming to Europe,” Tuomela said, after Uniper confirmed its global commodities arm sent more LNG to Asia in the period.
Uniper's adjusted earnings jumped 52% in the first nine months of the year as its trading business was buoyed by rising prices. The company nevertheless had a high carbon bill following a 21% surge in emissions as it ramped up coal- and gas-fired power output amid the energy squeeze.
The utility had to increase provisions to cope with soaring emission costs, but said carbon-hedging transactions will help cushion the impact of further price spikes. Those hedges will be unwound in the fourth quarter, eliminating any impact on full-year earnings, it said.
Uniper shares were little changed at 38.87 euros as of 1:14 p.m. in Frankfurt, and are trading 43% above their price a year ago.
The utility is majority-owned by Finland's Fortum Oyj, which may be heading for a full takeover as soon as next year.
“The Uniper share price has been strong recently,” RBC Europe analysts said in a report. It's “already factoring in the positive commodity environment, as well as expectations for a full takeover by Fortum.”
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