German gas importer VNG clinches deal to avoid state aid

BERLIN (Reuters) -VNG, one of Germany’s biggest importers of Russian natural gas, has withdrawn its request for state stabilisation measures, the economy ministry and parent company EnBW said on Friday, noting that they had reached a deal to secure the company’s liquidity.

VNG had asked the government for state aid in September to stay afloat after it was hit by a sharp drop in Russian gas deliveries, forcing it to fill the gap in the spot market at much higher prices.

The crisis led larger rival Uniper to seek a deal with the German government for full nationalisation.

EnBW said the two sides had come to an agreement which will not require the government taking a stake in the company.

Instead, the agreement grants VNG a claim to damages under Germany’s energy security law.

“We are happy with the solution found,” said EnBW CFO Thomas Kusterer in a statement.

He said a non-operating burden on earnings of 600 million euros ($630 million), forecast for the fourth quarter, no longer applied.

As a result of the agreement with the government and lower market prices, the total burden on EnBW’s earnings will not exceed 1.18 billion euros in total, irrespective of further price developments up to the end of 2022, Kusterer said.

($1 = 0.9511 euros)

(Writing by Rachel More; editing by Matthias Williams and Louise Heavens)