The state spends a lot of money to save an important company in Germany from bankruptcy. The Nord Stream pipeline is also making headlines. From now on, less gas will flow through them to Germany. The most important questions and answers.
The federal government supports a key company for the gas supply in Germany with billions in contributions. It is about Gazprom Germania, which is now under German state control. As a result of Russian sanctions, the company has stumbled and is now being protected from insolvency by a loan, the federal government said. Meanwhile, the Russian energy giant Gazprom announced that it would cut supply through the Nord Stream pipeline in the Baltic Sea. Delays in repair work by Siemens were given as the reason. However, the federal government sees the security of supply as secured.
According to information from government circles, the support for Gazprom Germania is between nine and ten billion euros. Aid is therefore planned via the state development bank KfW. The federal government provides guarantees.
Gazprom Germania is a key company for gas supply in Germany, the federal government said in Berlin. “With this approach, the federal government retains its influence on this part of the critical energy infrastructure and prevents energy security from being endangered.”
At the beginning of April, the federal government took control of the German subsidiary of the Russian state-owned company Gazprom via the Federal Network Agency. The Federal Network Agency became a trustee. The reason for the step was the planned “opaque sale” of the company to a Russian company. The gas trader Wingas, which supplies municipal utilities and industrial companies, among others, also belongs to Gazprom Germania.
In mid-May, however, Russia imposed sanctions on Gazprom Germania and almost all of its subsidiaries, causing the company to experience “financial difficulties”, according to the German government. As a result of the sanctions, gas deliveries were canceled. As a result, replacement purchases have become necessary at currently very high market prices – gas prices have also risen sharply as a result of the Ukraine war.
This has deteriorated Gazprom Germania’s financial situation to such an extent that liquidity has to be secured with a KfW loan. The federal government wants to avert the company’s insolvency and prevent subsequent effects on the market. The money is used to secure liquidity and to procure gas.
Federal Finance Minister Christian Lindner (FDP) said on the sidelines of a visit to Sofia: “To secure the energy supply, the federal government will ensure the company’s ability to act.” The state assumes guarantees for the KfW loans, but this currently has no impact on the federal budget.
On the same day, the Russian energy giant Gazprom announced that it would reduce the maximum gas supply volumes through the Nord Stream Baltic Sea pipeline to Germany by 40 percent. The reason for this are delays in repair work by Siemens, the state-owned company announced on Tuesday. A gas compressor unit was not returned in time from repairs. Therefore, only up to 100 million cubic meters of gas could be pumped through the pipeline every day – around 60 percent of the previously planned daily volume of 167 million.
The Siemens subsidiary Siemens Energy said it delivered gas turbines for a Nord Stream 1 compressor station in Russia in 2009. In order to keep the pipeline running, it is necessary for these turbines to be regularly overhauled. For technical reasons, this can only be done in Montreal, Canada. Due to the sanctions imposed by Canada, Siemens Energy is currently unable to deliver refurbished gas turbines to customers. “Against this background, we had informed the Canadian and German governments and are working on a viable solution,” said a company spokeswoman.
According to the Federal Government, the security of supply for gas is guaranteed. “We are monitoring the situation and examining the facts,” said a spokeswoman for the Ministry of Economic Affairs. The gas supply management report from the Federal Network Agency said on Tuesday evening that the authority was monitoring the situation very closely. “The full facts and potential impact of the declining flows from Nord Stream 1 remain under review.”
The Russian leadership has always stressed that it is a reliable gas supplier. Nevertheless, there are fears in the West that Gazprom, for example, will turn off the faucet in the dispute over payment terms.
For Germany, Nord Stream is the main supply pipeline with Russian gas. The Yamal-Europe line had previously not been filled. The transit of Russian gas through Ukraine is also well below plan. The completed Nord Stream 2 pipeline never went into operation because of the Russian attack on Ukraine.
The gas storage facilities in Germany should be filled quickly in order to have enough gas in winter if deliveries fail. At the moment the storage is about 55 percent full.
Gazprom Germania operates large storage facilities in Germany. The fiduciary management of the company by the Federal Network Agency is now to be secured in the longer term.
So far, the federal government had used foreign trade law as a basis for this – but the trusteeship is limited to the end of September 2022. A construction based on the recently amended Energy Security Act is now planned. On this basis, the Federal Network Agency has more options, and the trusteeship can be extended several times.
Gazprom Germania will also be renamed “Securing Energy for Europe GmbH” – also as a signal for the importance for the energy supply in Europe. It was also said that the federal government was examining ways to convert the loan into equity. That would mean that the state would step into the company.
