Europe burns cash to help businesses in deep energy crisis.

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  • European gas prices have plunged amid the Ukraine crisis.
  • As oil prices rise, utilities face liquidity problems.
  • Germany ‘does everything possible’ to help companies
  • Russian provocation sends oil, increasing price pain

BERLIN/LONDON, Sept 21 (Reuters) – Germany’s national gas importer Uniper ( UN01.DE ) on Wednesday and Britain released wholesale electricity and gas costs for businesses, the latest moves in Europe to keep the lights on and heaters running this winter. The war in Ukraine escalated.

Russian President Vladimir Putin has threatened to further tighten global oil supplies by announcing Russian military action in part to send oil and gas prices soaring, adding to price woes on global energy markets.

Gas and energy prices in Europe have plummeted as Russia slashed oil exports in retaliation for sanctions imposed by Russia during its invasion of Ukraine. Read more

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Britain’s finance minister, Kwasi Kwarteng, said: “We are here to stop the collapse of business, protect jobs and limit inflation.”

More than 20 British energy suppliers have collapsed, many because government price hikes have prevented them from passing on the full cost of fuel to households, as many businesses struggle with higher bills. Read more

European gas prices increased on Wednesday, after Putin’s announcement, hitting 212 euros per megawatt hour (MWh), still around 343 euros below this year’s peak but 200% more than a year ago. Fuel prices rose 2 percent.

The EU, which once relied on Russia for 40 percent of its gas needs, has been scrambling to find other supplies.

Warren Patterson, head of commodities research at ING, said: “The (Russian) move could prompt calls for more aggressive action against Russia in light of Western sanctions.”

Germany’s Uniper, once heavily dependent on Russian gas imports, has been among the worst hit by Russia cutting off pipelines and sending prices soaring.

After efforts to fund the service with multibillion euros proved insufficient, the government agreed to buy the remaining stake owned by Finland’s Fortum ( FORTUM.HE ) to keep the company afloat, leaving the state with 99 percent ownership. Read more

‘Do your best’

“The state … will do everything possible,” said German Economy Minister Robert Habeck, announcing the Uniper measure and other measures to help Germany avoid winter energy shortages. Read more

The deal includes an 8 billion euro ($7.94 billion) capital injection, Uniper said, bringing the government’s total capital injection so far to at least 29 billion euros.

Germany was more reliant than most in Europe on Russian gas delivered through the Nord Stream 1 pipeline. Russia halted the pipeline, blaming Western sanctions for hampering operations. European politicians use this as an excuse and say that Moscow is using force as a weapon.

The German government has placed Gazprom Germany, the Kremlin-controlled unit of Gazprom and a subsidiary of Russian oil company Rosneft ( ROSN.MM ), under trusteeship — a right of nationalism. Small companies have also asked for help.

Fortum CEO Markus Rauram described the sale of the company’s Uniper stake as a painful but necessary step, adding that the company, which is mostly owned by the Finnish state, had lost around €6 billion in Uniper’s investment.

Russian gas flows through Ukraine to Europe have continued, but have reached low levels. Gazprom ( GAZP.MM ) said on Wednesday that it will send 42.4 million cubic meters of gas to Europe via Ukraine in the coming days.

Eastbound gas flows from Germany to Poland via the Yamal-Europe pipeline were halted on Wednesday, while Russian supplies through Ukraine remained stable. Read more

In the United States, Democratic and Republican senators proposed on Tuesday that the administration of the President of the United States, Joe Biden, should use secondary sanctions against international banks to strengthen the plan to improve the price of Russian oil in the G7 countries. Read more

Moscow says such a cap, if implemented, would reduce the flow of oil and gas to the West.

The move by US lawmakers came hours before Putin ordered Russia to move for the first time since World War II, warning that Moscow would return its vast arsenal if it continued its “nuclear blackmail” on the West. Read more

Many countries have banned imports of Russian crude and oil, but Moscow has been able to maintain its income thanks to increased crude sales to Asia.

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Reported by Reuters; Writing by Ingrid Melander; Edited by Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.

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