Germany Threatens To Seize Gazprom Facilities From Russia

The Economy Ministry stated that it was determined to pursue measures against the Rosneft-owned refinery in Schwedt actively threatening to seize Gazprom facilities from Russia.

Germany is racing to release its hold and reclaim control of its crucial energy infrastructure after years of capitulating to Russian oil and gas corporations.

Berlin is considering compelling Gazprom, which is supported by the Kremlin, to sell important gas holding facilities throughout Germany, essentially evicting those installations, according to a government source and two other individuals knowledgeable about the arrangements.

Furthermore, Germany’s Economy Ministry claims it is “working intensively” to diminish the impact of Rosneft, a Russian state-controlled energy company that operates a refinery in the eastern town of Schwedt that processes roughly a quarter of the country’s oil supplies.

Russia’s influence over Germany in the energy industry extends well past its huge position in providing Europe’s largest economy with oil and gas, as demonstrated by the government’s newfound attention on the storage sites and refineries.

The conflict in Ukraine has served as a wake-up message for Germany’s political establishment, which has long believed that cheap gas from Moscow was not only good for business, but also provided Russia with a motivation to stay in the international fold.

Even before Russian President Vladimir Putin commenced his all-out incursion on Ukraine in February, warning bells began to sound.

Gas at three major Gazprom storage locations in Germany, which includes one in Rehden, one of the largest of its type in Western Europe, slumped to disconcertingly low levels ahead of the current winter, elevating worries that Russia had supplied less gas than standard to artificially raise energy prices and put stress on Germany and the EU ahead of the conflict in Ukraine.

“A situation like the one we had this winter must not repeat itself. That’s why we’re doing everything we can to make sure this doesn’t happen,” said Andreas Rimkus, a lawmaker from Chancellor Olaf Scholz’s Social Democrats (SPD) who specializes in energy policy.

“In the case of behavior that goes against the market, it’s right to look closely at the possibility of government intervention,” he added.

Michael Kruse, the energy policy spokesperson for Scholz’s ruling coalition partners, the Free Democratic Party (FDP) and the Green Party, supported that perspective.

“Russia has strategically invested in refineries and gas storage facilities for years and is now using them as a weapon against us. We cannot stand by as a sovereign state while an authoritarian regime puts the thumbscrews on us and tries to blackmail us,” he said.

“Russian companies must hand over energy storage facilities in Germany as soon as possible,” Kruse stated, pointing out that Russia supplies 55 percent of Germany’s gas.

Gazprom revealed Friday that it had “terminated its participation in the German company Gazprom Germania GmbH and all its assets,” a step that would seem to be connected to government concerns, though it was not promptly evident who would be the new owner or what impact this would have on gas supply and storage. Trading and storage assets are owned by Gazprom Germania.

No Kremlin concerns

For years, German leaders, notably former Chancellor Angela Merkel, ignored warnings from the United States, Eastern European countries, and experts that Germany was becoming more reliant on Russian energy supplies. Corporations like Gazprom were also able to acquire essential infrastructure like gas storage facilities thanks to Berlin’s approval.

Foreign Minister Annalena Baerbock conceded this week that the strategy was “now taking its revenge in the most brutal way.”

The Economy Ministry’s spokesperson seemed to have no prompt response on efforts to compel Gazprom to relinquish its storage facilities. The representative did admit, though, that efforts were being made to decrease Rosneft’s dominance in the energy industry.

On Friday, the German newspaper Handelsblatt reported on government measures to confiscate Gazprom and Rosneft holdings in Germany.

When it concerns to gas storage, a legal plan (read below) published by the European Commission last month paves the way for such government intervention. The proposal calls on countries to “identify gas storage as a critical infrastructure and introduce provisions to tackle ownership risks for gas infrastructure,” meaning that authorities “certify that ownership by a person or persons from a third country does not put at risk the security of supply.”

The Commission document notes that while the proposal is still seeking legislative approval — a process that could take months – EU members “should act as if the legislation was already in place and take measures to ensure refilling of storage in time for next winter,” in an extraordinary move that emphasizes the severity of the issue.

Last week, Germany approved legislation requiring gas storage facility providers to load their facilities to 65 percent capacity by August 1, 80 percent capacity by October 1, and 90 percent capacity by December 1.

According to Claudia Kemfert, head of the energy department at the German Institute of Economic Research, this law, in conjunction with the EU plan, enables Germany to put substantial strain on Gazprom and possibly confiscate its gas storage facilities (DIW Berlin).

“If Russian operators are found to be not filling up the storage facilities accordingly — and there is a clear first deadline with the filling level requirement of 65 percent by August 1 — the government can intervene here,” she said.

According to Thekla von Bülow of consultancy Aurora Energy Research, the enforced sale of Gazprom-owned storage sites might be completed rapidly by using the German investment bank KfW or a federally-owned firm, allowing Berlin to avoid waiting for a willing bidder.

She did, however, point out that “such sovereign intervention in corporate ownership” may necessitate the government moving to the third level of its gas supply emergency response plan (Berlin triggered the first level this week) and obtaining German parliament permission.

Russian lawsuits against such measures are unlikely, according to Kruse, who claims that if gas storage sites are categorized as important infrastructure, “the legal situation is clear.”

The Economy Ministry stated that it was determined to pursue measures against the Rosneft-owned refinery in Schwedt.

“We are well aware of the problem,” said a spokesperson. “The German government is working hard to solve this complex problem.”

Read the full document below:

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