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German gas importer VNG seeks help from government

Construction work is taking place on the newly built jetty dolphins for the future import terminal for liquefied natural gas (LNG) in Wilhelmshaven, Germany, Thursday, Sept. 8, 2022. An FSRU (Floating Storage and Regasification Unit) for importing liquefied natural gas to Germany is scheduled to dock at the jetty in Wilhelmshaven this winter. (Sina Schuldt/dpa via AP) (ASSOCIATED PRESS)

BERLIN (AP) — German gas importer VNG is seeking help from the government after cuts to Russian gas supplies forced it to buy gas at far higher prices on the market to fulfill its supply contracts.

Energy company EnBW, which has a majority stake in VNG, said Friday that its subsidiary was submitting an application for “stabilization measures” to the Economy Ministry “to avert further damage and to enable the VNG Group’s business operations as a whole to continue.”

Ministry spokesman Robert Saeverin said the application had been received but declined to comment on what measures might be considered.

VNG supplies gas to about 400 municipal utilities and industrial operators and met about 20% of German gas requirements last year, according to EnBW.

The move comes after the government in July announced that it would take a roughly 30% stake in Uniper, which has been Germany's biggest importer of Russian gas, as part of a rescue package prompted by surging prices for natural gas and reduced Russian deliveries.

It also decided to introduce a new levy on natural gas that is aimed at rescuing importers slammed by the Russian cutbacks tied to the war in Ukraine. The government later moved to lower the value-added tax on gas from 19% to 7% until the end of March 2024 in an effort to make up for the effect of the surcharge.

Russia's Gazprom started reducing energy deliveries to Germany through the main Nord Stream 1 pipeline in mid-June, citing alleged technical problems and the effect of Western sanctions. German officials have dismissed that explanation as an excuse for a political decision to create uncertainty and drive up prices.

Russia, which before the reductions accounted for a bit more than a third of Germany’s gas supplies, has since cut off deliveries through Nord Stream 1 altogether.

Chancellor Olaf Scholz said Wednesday that Germany is well-placed to get through this winter with enough energy thanks to efforts to shore up supplies from elsewhere and ensure that storage facilities are filled.