To avoid insolvency, the German government granted the former German Gazprom subsidiary a large loan. In a separate step, Gazprom cut supplies through the Baltic Sea pipeline Nord Stream 1.
Gazprom Germania maintains large natural gas storage facilities, trades in gas and is a co-owner of gas pipelines.
In order to ensure the supply of natural gas, the German government is taking new measures to tighten control of Gazprom Germania and is providing the company with a loan worth billions. This the federal government announced on Tuesday. The fiduciary administration of Gazprom Germania imposed at the beginning of April will be extended beyond September.
Central for the supply
Gazprom Germania was until recently the German subsidiary of the Russian state gas company Gazprom. The Berlin-based company maintains large natural gas storage facilities, trades in gas and is a co-owner of gas pipelines. According to the federal government, this makes it a “key company for gas supply in Germany”. The supply of numerous municipal utilities depends indirectly on him.
On April 4, the German government placed Gazprom Germania under the trusteeship of the Federal Network Agency. The background was the opaque sale of the company to a Russian company with unknown beneficial owners and the order of this company to liquidate Gazprom Germania.
Russian sanctions
In a tit-for-tat, on May 11, Russia imposed sanctions on Gazprom Germania and almost all of its subsidiaries. According to the federal government, this provoked financial difficulties for the company, which has to procure and secure replacements for the failed Russian gas deliveries at currently very high market prices. As a result, his financial situation deteriorated so much that the federal government had to secure liquidity with a loan from the state development bank KfW.
This is intended to avert insolvency and prevent a cascade effect in the market. There is no official information on the amount of the loan. According to government circles, it should be about 9 to 10 billion euros. The federal government emphasized that the money may only be used for business operations and maintaining the gas supply and cannot flow to Russia. In a next step, options will be examined to convert the loan into equity and thus ensure security of supply in the long term.
More control, new name
The Federal Chancellery and the Ministries of Finance and Economics have also decided to extend the trusteeship of Gazprom Germania beyond September 2022. Previously based on foreign trade law, it will now be based on the Energy Security Act, which was amended in May. This gives the trustee more options. In addition, unlike in the past, the trusteeship can be extended several times for six months at a time. The company is also renamed Securing Energy for Europe GmbH (Sefe).
The voting rights of the shares were already transferred to the Federal Network Agency with the trusteeship decreed at the beginning of April. This has named a managing director and is entitled to give him instructions.
Gazprom throttles delivery
Just hours before the German government announced Gazprom Germania, its former parent company, the Russian gas group Gazprom, announced in a separate step that the maximum gas deliveries through the Baltic Sea pipeline Nord Stream 1 to Germany would be reduced by 40 percent due to delays in repair work. According to agency reports citing company information, the delay came because German company Siemens Energy is unable to return gas turbines that were sent to Canada for overhaul due to Canadian sanctions. The German Ministry of Economics stated that the supply is currently still guaranteed.
You can contact the Berlin business correspondent René Höltschi Twitter follow.