Frankfurt — Germany’s energy network regulator on Friday said it would ensure ongoing operations at Gazprom Germania, a trading, storage and transmission business abandoned by Russia’s Gazprom, and called on market operators not to cut ties.
With assets and subsidiaries in Germany, Britain, Switzerland, Belgium, the Czech Republic and outside Europe, the firm’s activities are essential for the European gas market and its supply to industry and households.
Russia’s Gazprom said a week ago it was quitting its business in Germany, at a moment of crisis in energy ties between the two countries following Russia’s invasion of Ukraine. It gave no explanation.
“The Bundesnetzagentur will ensure that all payments of Gazprom Germania GmbH may only be made to maintain business operations and will thus prevent an uncontrolled outflow of funds,” the German regulator said in a letter to operators connected with Gazprom Germania and seen by Reuters.
Spokespeople for the authority confirmed the letter had been posted.
“It will also ensure that the company can, and will, meet its payment obligations to continue its business operations,” it added.
Gazprom Germania GmbH was taken into the regulator’s control on April 4 as the Economy Ministry sought to stave off a possible acquisition by JSC Palmary and Gazprom Export Business Services LLC, both of Russia, the Economy Ministry said at the time.
Acquisitions of critical infrastructure by operators from outside the EU are prohibited under German foreign trade law, unless reviews allow it.
Its operations, based on Russia’s gas production, span supplies to wholesalers and retailers, storage and pipeline transmission, covering the entire gas value chain.
Its operations include Germany’s biggest gas storage facility at Rehden in Lower Saxony, with 4 billion cubic metres of capacity.
The regulator, in its letter addressed to banks, business partners, services providers and customers, said the company needed to procure gas and have the means to pay for it, avoiding insolvency.
“The consequences (of an insolvency) for the energy supply system, not only in Germany but in Europe as well, would be severe,” it said.
Trading firms could collapse, transport would be disrupted, and underground storage caverns would remain unfilled, it said.
The April 4 move by the authority means it can remove executives, hire staff and direct management, as well as guarding against an outflow of finances.
Tobias Federico, analyst at Berlin-based Energy Brainpool which advises the government and utilities, said the market needed a perspective beyond Sept. 30, 2022, when the regulator’s current mandate ends, as the winter season begins when gas is being taken out of storage.
“Can the supervision by the Network Agency be extended, will there be forced expropriation, or nationalization?” he said.
“Without a perspective of who will become the owner, the market will be hesitant when it comes to feed-in (into storage).”
Wingas, a Gazprom Germania subsidiary and one of Germany’s biggest gas traders, said in response to an enquiry after the April 4 move by the regulator that it would be operating under the changed parameters.
“Our primary goal remains to ensure the supply of our customers and the fulfilment of our contractual delivery obligations,” it said.
The Bundesnetzagentur said in a press release that it had appointed Egbert Laege, a former board member of energy bourse EEX, as general representative to support the company’s management.
- Reuters (Reporting by Vera Eckert and Tom Kaeckenhoff; Editing by Maria Sheahan, Jason Neely, Jan Harvey and Nick Macfie)
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