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German State Temporarily Takes Over Control of Gazprom Germania by David Boos

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German State Temporarily Takes Over Control of Gazprom Germania

Pressed to secure stability in the energy sector, Germany has temporarily taken control of Russian-owned energy giant Gazprom Germania GMBH, Germany’s central gas supplier since the 1980s. On April 1st, Russia threatened to shut down operations unless Germany agreed to pay in rubles. Germany refused to comply, and on April 4th, by fiat from the German energy regulator, it seized proprietorship over all operations of the company. 

The maneuver is part of the German Economy and Climate Protection Minister Robert Habeck’s quest to make Germany independent of Russian gas supplies. After his negotiations in Qatar failed to produce a short-term solution (the European Conservative reported), he appointed the Federal Network Agency as temporary trustee for Gazprom Germania, until at least September 30th.

Unclear legal relationships seemed to have triggered this decision, according to the ministry. The Federal Network Agency justified its decision based on a breach of the reporting obligation listed under the Foreign Trade and Payments Ordinance. The justification states that “Gazprom Germania GmbH operates critical infrastructure in Germany and is thus of outstanding significance to Germany’s gas supply.” According to Habeck, the move served “to maintain security of supply” and was “absolutely necessary.”

The ministry’s statement further said that Gazprom Germania was facing a takeover by the Russian investment groups JSC Palmary and Gazprom export business services LLC. Since Gazprom Germania operates critical infrastructure, any acquisition by a non-EU investor must be approved by the Ministry of Economy. This approval was not granted. Since it is unclear who is economically and legally behind these two companies, and since they had issued an order for the liquidation of Gazprom Germania, the ministry blocked the sale and put Gazprom Germania under a trusteeship instead.

According to Habeck, the German government is “doing what is necessary to ensure security of supply in Germany:”

This includes not exposing energy infrastructures in Germany to arbitrary decisions by the Kremlin. The unclear legal situation, violations of the notification requirement and the announcement of the liquidation of Gazprom Germania are now forcing the German government to take this step. We have not granted approval for the acquisition [by JSC Palmary and Gazprom export business services LLC]. Instead, the Federal Network Agency is assuming the function of a shareholder.

The takeover of Gazprom Germania by the Federal Network Agency is likely just the first step on the road to ensuring German security of supply. The Energy Security Act, which also allows expropriation in extreme cases, is to be revised in such a way that the possibilities for expropriation are clarified. The prerequisite for trust administration is to be amended so that companies that “no longer adequately fulfill their tasks” may be placed under trust administration.

In addition to Gazprom Germania, a refinery in Schwedt (Brandenburg) is also on the radar of the Ministry of Economics. The Russian energy group Rosneft already owns more than 50% of the shares and plans to acquire a further 37.5% from Shell, which would make the refinery 91% owned by Rosneft. The Federal Cartel Office had not raised any concerns in this regard, but now the Ministry of Economics is examining this sale. The parliamentary group leader of the Brandenburg Christian Democrats of the CDU, Jan Redmann, has already spoken out in favor of a similar state takeover as with Gazprom Germania: “We are in favor of the state taking on a stronger role as far as the refinery in Schwedt is concerned,” Redmann said and advocated for “a similar approach” as that used with Gazprom Germania.

David Boos is an organist, documentary filmmaker, and writer for The European Conservative and other publications.