FAQ
Status: 05.04.2022 11:31 a.m
The Federal Network Agency has taken control of Gazprom’s German subsidiaries. Is the Russian group expropriated in Germany? What does this mean for the gas supply? Answers to important questions.
What did the Federal Ministry of Economics decide?
“The Federal Network Agency will be used as a trustee for Gazprom Germania for a transitional period,” the Bonn authority announced yesterday. This had previously been announced by Federal Economics Minister Robert Habeck. For a transitional period, the network agency will assume the function of a shareholder on a trustee basis. Among other things, it should ensure proper management.
What does that mean exactly?
With its order, the federal government has taken over supervision of the German subsidiary of the Russian gas giant Gazprom. The group is responsible for 40 percent of the gas supply in Germany and is therefore the largest supplier. The Federal Network Agency will exercise all voting rights from shares in Gazprom Germania until September 30 and will be authorized to issue instructions. With this step, the state is intervening in the gas market in an unprecedented way. The Federal Network Agency assumes the role of owner.
“We are aware of the responsibility for the secure gas supply that this task entails. Our aim will be for Gazprom Germania to be managed in the interests of Germany and Europe,” Bundesnetzagentur President Klaus Mueller said tagesschau.de. “We want to take all necessary steps to continue to ensure security of supply. The business of Gazprom Germania and its subsidiaries should continue to be controlled in this sense.”
Which business is it?
Gazprom Germania comprises three major business areas. Through its subsidiary Astora, the company operates Germany’s largest gas storage facility in Rehden, Lower Saxony, which accounts for a fifth of Germany’s storage capacity.
It is also the owner of other important companies in the German gas industry. These include the gas trader Wingas, which supplies municipal utilities, and a minority stake in the gas transport company Gascade. It is also about supply contracts with Gazprom Export.
What are the tasks of the Federal Network Agency?
Through the trusteeship, the Federal Network Agency can act like the owner of Gazprom Germania. Your task is to secure the three business areas. This includes, for example, compliance with the Gas Storage Act – i.e. the fulfillment of the legal minimum dimensions. Due to the war in Ukraine, low levels of reserves had triggered fears that the supply of fuel could become scarce.
In addition, the authority should use the time to bring order to the situation. Among other things, she is entitled to exchange members of the management and to issue instructions. “The perception of the voting rights of the shareholders is excluded,” said the Federal Ministry of Economics.
What does that mean for the gas supply?
It is currently unclear what exactly will change. According to observers, numerous talks are currently taking place. Many questions still seem open. First of all, the operation must continue safely and the exact situation in the company Gazprom Germania must be understood.
Security of supply is currently guaranteed, said Economics Minister Habeck. According to the current situation report by the Federal Network Agency, the gas supply is stable. The network operators are not reporting any special incidents.
There was initially no reaction from Russia. Apparently, the federal government is assuming that gas supplies from Russia will not be interrupted. Otherwise, the trusteeship of the Federal Network Agency is not necessary for the continued operation of Gazprom Germania. Yesterday, Habeck and Federal Finance Minister Christian Lindner from the FDP emphasized again that the federal government is currently rejecting a ban on imports of Russian gas, despite the war in Ukraine.
What are the reasons for the arrangement?
Economics Minister Habeck justified the decision with the unclear legal situation and a violation of reporting regulations. The aim is to ensure security of supply and to partially reduce the Russian influence. According to the Green politician, Gazprom Germania GmbH operates critical infrastructure in Germany itself and through its subsidiaries. “It is active in gas trading, gas transport and gas storage and is of paramount importance for the gas supply in Germany.”
The parent company surprisingly announced on Friday that it was withdrawing from Gazprom Germania and its holdings. “It was not communicated who the new economic and legal owner of this holding should be,” said Habeck. This is in itself a violation of the obligation to report under the Foreign Trade and Payments Ordinance.
The Economics Ministry did learn of an “indirect acquisition” of Gazprom Germania by the companies JSC Palmary and Gazprom Business Export Services LLC. In the case of critical infrastructure, any acquisition by a non-EU investor must first be approved by the Ministry of Economic Affairs. However, it is unclear “who is behind the two companies economically and legally”. One would not expose energy infrastructures in Germany to arbitrary decisions by the Kremlin, Habeck said.
Another reason was the possibility of a technical bankruptcy of Gazprom Germania, sources say. Although the energy companies are exempt from Western sanctions, banks and business partners have distanced themselves from Russian companies since the sanctions came into force. But if the German state runs the business, it’s a different situation for the financiers.
In addition, the purchaser ordered the liquidation of Gazprom Germania – i.e. the liquidation of the company through the sale of the assets – which is not legal as long as the purchase has not been approved. “A liquidation would result in the end of the legal existence of Gazprom Germania.”
What would that have meant for the supply contracts?
A liquidation would have affected the contracts with Gazprom Export. According to observers, there was a scenario in which the obligations would no longer apply if a contractual partner defaulted. Then there would have been a need to negotiate new supply contracts with Russia in the current situation – with chain reactions in the German energy industry.
Has Gazprom in Germany now been expropriated?
Habeck uses a paragraph in the Foreign Trade Act for the arrangement. Accordingly, the establishment of a trust to avert a threat to public order and security is legally possible. This is not an expropriation, as has recently been speculated. How things will continue with Gazprom Germania’s assets is still unclear.
According to the 2020 annual report, Gazprom Germania, including its subsidiaries, had 1,543 employees, including 339 in Berlin. The company, founded in 1990, has gas storage facilities in Germany and Austria with a total capacity of six billion cubic meters.