E.ON slashes value of investment in Nord Stream 1 by almost £600m
The energy network operator E.ON has slashed the value of its investment in the Nord Stream 1 gas pipeline by about €700m (£592m), as a result of “increased uncertainties” following Russia’s invasion of Ukraine.
The German utility firm had said in March that its 15.5% stake – which E.ON holds indirectly via its pension fund – had a book value of €1.2bn, so its revaluation represents a 58% decline in value.
The company Nord Stream owns and operates two pipelines that each stretch 1,224km (761 miles), to bring natural gas from Russia to Germany.
Germany halted the certification process for the controversial Nord Stream 2 pipeline in late February, days before Russia’s full invasion of its neighbour, after Moscow granted recognition to the self-proclaimed republics of Luhansk and Donetsk in east Ukraine.
E.ON’s chief executive, Leonhard Birnbaum, said: “The current energy crisis finally makes clear that Europe needs to transform its energy system. To be independent of Russian gas. To ensure supply security.”
At the release of its last annual results in March, E.ON warned of the “valuation risks for investments”, including its stake in Nord Stream 1, which is majority-owned by Russian state energy firm Gazprom.
The flow of gas to Europe through Nord Stream 1 has reduced to about 20% of the pipeline’s usual capacity in recent weeks, half the amount that had been delivered since service resumed after maintenance work.
Gazprom has blamed reduced gas flow on technical problems with the pipeline’s turbines, an explanation dismissed by the German government as an invented pretext.
E.ON described the situation on the energy markets as “tense”, while Birnbaum added: “We’re helping Germany and our European markets respond to the extraordinary crisis in the short term and also working to establish long-term energy security by accelerating the energy transition.”
E.ON – the UK’s biggest energy supplier with about 3.8 million customers – also reported results for January to June that showed a 15% fall in its first-half adjusted pre-tax profit to €4.06bn. It maintained its 2022 outlook for full-year adjusted pre-tax profit between €7.6 and €7.8bn.