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German Government Nationalizes Gas Unit Seized From Gazprom


The German government on Monday said it would nationalize a former subsidiary of Gazprom, Russia’s state-owned natural gas monopoly, to maintain the country’s energy security.

Last spring, Germany acquired the company, formerly Gazprom Germania but now called Secure Energy for Europe, or SEFE, and placed it in a trust fund. By becoming the sole owner, the German government can transfer to the company 225.6 million euros ($233 million) to ensure the company’s survival, the economy ministry said.

The European Commission approved the move over the weekend.

The action is necessary to stabilize the company’s finances and allow it to continue buying and distributing natural gas, the ministry said.

SEFE is the second natural gas supplier Germany has had to join and save in the name of energy security since February, when Russia began weaponizing energy after its invasion of Ukraine. Berlin paid 8 billion euros in September to buy Uniper, which was pushed to the brink of default when Russia cut off natural gas supplies to Europe.

SEFE owns a number of natural gas suppliers and storage facilities in Germany. The government placed it in a trust fund in April, after Gazprom sought to sell it to another Russian company with the intention of liquidating it. It then provided the company with a loan of nearly 14 billion euros. With a 14% share in Germany’s overall natural gas supply market and a 28% share in storage facilities – including Western Europe’s largest, in Rehden – the company is deemed essential to secure German gas supplies.

But the trust is unclear about its ownership. Western business partners and banks, fearful of being entangled in European sanctions against Russia, fled in fear, leaving the company heavily indebted and facing insolvency. payment capacity, the ministry said.

“The German government is now creating clarity in the ownership structure to stabilize the company and secure gas supplies,” the ministry said in a statement announcing its decision.

Under Gazprom Germania, the storage in Rehden was almost empty by early 2022. Gas storages are usually lower in late winter, and the lack of most fuel has caused alarm in Berlin. But as the facility remained in Gazprom’s hands, the German authorities were unable to contribute to its replenishment.

In the months since taking over the company, Germany has purchased large quantities of liquefied natural gas to fill the volumetric unit, bringing it to nearly 95% capacity.

The SEFE loan is part of a €200 billion rescue package that the German government has put together to help companies and households cope with energy prices that have in some cases more than doubled in the past few years. a year. High energy prices have driven German inflation into double digits for the first time in decades.

Both SEFE and Uniper suffered financial losses due to the loss of Russian gas pipelines. The companies act as middlemen between natural gas producers and consumers, who have long-term contracts with fixed prices. In the absence of gas from Russia, both companies are forced to pay more for gas on the spot market, where traders buy and sell energy intended for immediate use, compared to they can collect from their customers.

Gas prices have corrected in recent weeks, falling due to a drop in demand as all gas is currently in storage, and the unusually mild temperature drop is expected to last through the winter. Analysts now say they expect Germany to be able to pull through without needing to run out of gas.

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