Plants in Rehden and Jemgum: expropriation of Russian gas storage facilities?

The Federal Network Agency has taken control of the Russian natural gas storage facilities in Germany. A new law is intended to ensure that filling levels remain stable in the future. But is that enough?

Since the beginning of the week, the Federal Network Agency has controlled the business of the German branch of the Russian gas giant Gazprom – and thus also of Astora – as a trustee. Until now, Gazprom Germania has operated the natural gas storage facilities in Rehden and Jemgum in Lower Saxony via this subsidiary.

According to the Federal Ministry of Economics, the aim of the order is, among other things, to ensure security of supply for gas and to reduce the Russian influence in parts. The Bonn authorities will now be in charge until the end of September. What happens after that is still unclear. A possible expropriation should also play a role in the plans – especially in the memory.

Some Russian gas storage tanks are almost empty

“The Ministry of Economic Affairs was already considering becoming the owner of the storage facility itself,” says Christian von Hammerstein from the Raue law firm. “We have learned that storage is an absolutely critical infrastructure.” It therefore makes sense to secure access to the 30 percent of Gazprom-controlled capacities in Germany.

The gas storage facilities had come into the public eye during the Russian war against Ukraine and as a result of the price turbulence. According to the Federal Ministry of Economics, the storage levels were historically low this winter. According to the database of the Gas Infrastructure Europe network, the last current total filling level for Germany was only 26.5 percent last Saturday (April 2). In addition, more energy is extracted every day (529 gigawatt hours) than is newly stored (486 GWh).

What is striking here is that the levels reported for the plants previously owned by Gazprom are far lower than the national average. According to the information, the largest German storage facility in Rehden was almost empty at the weekend with only 0.5 percent utilization. The memory in East Frisian Jemgum was 15.8 percent full. The low filling is considered Russia’s strategy to artificially drive up prices.

The law provides for minimum filling quantities

According to the Ministry of Economic Affairs, such a situation should not be repeated next winter. Because of the liberalization of the gas market, the state has not been able to intervene so far. A first step towards regulation is the recently passed Gas Storage Act, which the Federal Council approved today. Accordingly, the gas storage tanks must be 80 percent full on October 1st, 90 percent on November 1st and 40 percent on February 1st.

The German Institute for Economic Research (DIW) has been calling for such a strategic gas reserve, which can supply Germany with fuel for at least 90 days, for a long time. “The specification of the gas storage reserve makes sense because we are currently in a crisis situation that makes it necessary to require gas storage operators to fill the gas storage sufficiently,” explains Claudia Kemfert, head of the Energy, Transport and Environment department at DIW tagesschau.de.

In the future, users of gas storage facilities will have to fill the capacities they have booked. Otherwise they will be taken away from them. If it is determined at an early stage that the minimum filling quantity has not been reached, special tenders are issued according to the law. If the filling levels are still not reached, the so-called market area manager – a subsidiary of all gas pipeline operators – is obliged to buy and store additional gas.

The Kremlin’s geostrategic weapon

But is that enough? According to the law firm Raue, which specializes in energy law, the measures will only take effect if all storage operators cooperate. This is questionable in Rehden and Jemgum, because last summer the Russian government used the storage facilities under its control as a geostrategic weapon against Germany by largely emptying them.

The law firm’s energy experts have drawn up a proposal that, according to the “Handelsblatt”, has also been sent to representatives of the federal government and some members of the Bundestag. The idea: expropriation of the Russian gas storage facilities in Germany without compensation. As a foreign state-owned company, Gazprom cannot invoke fundamental rights and therefore cannot insist on compensation under Article 14 of the Basic Law, the lawyers argue.

Experts disagree over expropriation

Heiko Lohmann from the energy information service Energate also sees shortcomings in the new law: “It sets requirements for storage users, but at the same time does not provide any incentives for implementation,” he says in an interview tagesschau.de. “On the contrary: For the private actors, the use of storage becomes inflexible and they lose profit opportunities.” Germany’s largest operator Uniper recently expressed similar criticism. The lower attractiveness for trading companies ensures that the operators would be deprived of their business basis. Because this depends on the use of the memory by the dealers.

Nevertheless, the law can fulfill its purpose due to the entry of the market area manager Trading Hub Europe (THE), according to energy expert Lohmann. This must either offer incentives through appropriate payments to book the storage, or use it himself. The expert therefore considers the expropriation of the storage facilities “not absolutely necessary”. Decisive for the filling is the use and not the property. In addition, Astora has so far adhered to German law and is currently also offering interruptible capacity to third parties in Rheden.

DIW expert Kemfert also considers the minimum filling of the storage facilities to be possible under the current market conditions. Therefore, there is no need to transfer them into state hands. However, the economist sees the storage facilities in Russian hands as an exception: “In view of this, it makes sense for the state to operate them on an interim basis.”

Perspective crucial for retailers

Control by the Federal Network Agency is certain until September 30th. But what happens afterwards? “The federal government should be thinking about this now. We need an extension in some way because the retailers need a perspective for the storage,” says Tobias Frederico, Managing Director of the consulting firm Energy Brainpool. tagesschau.de.

After all, the gas that will be used during the cold period from October must already be stored. “The owner of the natural gas must have confidence that the gas can also be emptied in the fall.” If the memory still belongs to a Russian company, the dealer does not know what will happen to it in the future or whether the company still exists at all.

Frederico therefore considers a selective expropriation of the Russian infrastructure in Germany to be a sensible step: “We realize that we have been quite blind to the geostrategic eye in recent years. Energy plays a decisive role in this. It is therefore of little help that a significant share of German natural gas storage capacity is in Russian hands.” On the other hand, the consultant rejects a general nationalization of all gas storage facilities in Germany: “That would be a signal in the wrong direction.”