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Berlin takes control of the German subsidiary of Gazprom to guarantee gas supplies | International

A cyclist walks past the Gazprom Germania headquarters in Berlin on April 1, 2022.
A cyclist walks past the Gazprom Germania headquarters in Berlin on April 1, 2022.FABRIZIO BENSCH (REUTERS)

It is a drastic step, but the German government assures that it is fully justified: Berlin takes control of the German subsidiary of the Russian gas company Gazprom. In an unprecedented decision, the Ministry of Economy and Climate headed by the green Robert Habeck has ordered the Federal Network Agency to temporarily take over Gazprom Germania, until next September. The objective: to ensure the energy supply in the country.

The decision is part of the efforts that the Government of Social Democrat Olaf Scholz is making in recent months to get rid of its dependence on Russian hydrocarbons; not only its supply, but also its storage, especially with regard to gas. After years of ceding power to public companies controlled by Moscow, Berlin is now seeking to regain control of its critical energy infrastructure.

Habeck justified the decision, which in practice can be considered almost an expropriation, in the lack of legal clarity on the situation of the company. A few days ago it was published that Gazprom had tried to transfer the German subsidiary to other companies based in the Russian city of Saint Petersburg, supposedly to avoid expropriation by the German government. Given the lack of transparency about the ownership of Gazprom Germania, the German Executive has placed it under the tutelage of the public agency that regulates the energy sector. “The government is doing everything necessary to ensure security of supply in Germany. This also means that we will not expose German energy infrastructures to arbitrary decisions by the Kremlin,” Habeck said in a statement.

Gazprom Germania plays a decisive role in Germany because it markets energy, transports gas and also operates storage facilities. One of its subsidiaries, Astora, manages the largest gas warehouse in the country, in the city of Rehden, in Lower Saxony, which is in turn one of the facilities with the largest capacity in all of Europe, with 4,000 million cubic meters. The Rehden depot has been in the crosshairs of the authorities because it has been almost empty throughout the winter. Berlin and Brussels suspect that Gazprom has been keeping storage levels artificially low to fuel the gas supply crisis and drive up prices.

The Federal Network Agency will retain all of Gazprom Germania’s voting rights and may remove and appoint members of the company’s board of directors. You can also dispose of your assets. The Ministry of Economy assures that it has made the decision after learning of the indirect acquisition of this subsidiary by the two Russian companies. “Given that it operates critical infrastructure, any acquisition by a non-European Union country must be approved by the Government,” justifies Habeck’s department, which says it does not know who is behind these two companies.

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Habeck has made a move just a few days after declaring the early warning phase of his gas emergency plan, a preventive measure against a possible escalation of the confrontation with Russia that could lead to a cut in supply. The trigger was the dispute with Vladimir Putin, who demanded payment in rubles for the gas and threatened to turn off the tap. Germany, along with the other G7 members, steadfastly refused to pay for the supplies in anything other than euros or dollars, the currencies listed in the contracts. For now, the gas continues to flow, both through the Baltic gas pipeline, the Nord Stream 1, and through the Yamal, which crosses Belarus and Poland until it reaches German territory.

Germany continues to block an embargo on Russian hydrocarbons despite the fact that pressure, both from its European partners and from part of the political class, increases with each passing day. The government maintains that cutting supply would hurt the German economy more than Putin. Scholz has defended that to dispense with Russian gas at once would mean entering a recession and endangering hundreds of thousands of jobs.

Berlin is working hard to reduce dependence on Russian hydrocarbons. In a few months it has managed to reduce from 55% to 40% the percentage of Moscow gas used by its industry and with which it feeds the heating of its 83 million inhabitants. The government has announced that it will be able to do without Russian coal and oil at the end of this year, but it assures that it is more complicated with gas and that it needs to keep the gas pipelines open until mid-2024. The pressure to close the tap immediately and assuming the economic consequences is increasing, especially after learning about the massacre committed by the Russian Army in Bucha, on the outskirts of kyiv. Defense Minister Christine Lambrecht assured in an interview on public television on Sunday that it is time to raise it with European partners.

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