Berlin working on multibillion euro rescue for Gazprom Germania

Berlin is putting together a multibillion euro rescue package for Gazprom Germania, the subsidiary of the Russian gas giant that was taken over by the German authorities last month, according to people familiar with the matter.

As part of the bailout, Germany’s state-owned development bank KfW would provide Gazprom Germania with a €5bn-€10bn loan, the people said, while emphasising that talks were ongoing.

Using taxpayers’ money to bail out a company that is still officially owned by Gazprom, the Kremlin-controlled energy company, could prove controversial in Germany.

But the unit plays an important role in Germany’s energy supply, and as such officials consider it is in the national interest to restore it to financial health.

The German government seized control of Gazprom Germania and its subsidiaries in early April, placing them under the trusteeship of the Bundesnetzagentur, the federal energy regulator.

The move was triggered by a change in the entity’s ownership structure that violated Germany’s strict law on foreign investment in critical infrastructure.

Gazprom Germania owns a number of gas storage facilities in Germany, including the country’s largest, Rehden; the gas distribution company, Wingas, which supplies major industrial consumers in Germany; and a UK trading division GM&T.

Russia struck back against the seizure of control of Gazprom Germania in May by reducing the volumes of gas it supplies to the company, forcing it to buy gas in the spot market instead, often at higher prices.

That, officials say, risked destabilising its finances, which would in turn harm its ability to meet its supply obligations to customers in Germany. These include some of the country’s biggest industrial companies, as well as municipally-owned utilities.

A spokesman for the Bundesnetzagentur said all state agencies were “working intensively to ensure that [Gazprom Germania] can continue to operate”. Asked about the loan, he said the BNA would not comment on speculation. The German government declined to comment, as did the KfW.

This month Gazprom Germania appointed Egbert Laege, a former Boston Consulting Group executive, as chief executive. In an email announcing the move Laege thanked his predecessor Igor Fedorov “for his services to the GPG Group” and wished him “all the best for the future”.

The decision to bail out Gazprom Germania is expected to enable GM&T to restart deals. GM&T is a major trader of gas, liquefied natural gas and power, buying from sources including Norway and the North Sea and selling worldwide.

It also buys the gas for Gazprom Energy, which supplies about a fifth of all non-household gas in the UK to roughly 30,000 commercial customers, including shops, pubs, NHS trusts and local authorities, along with two-thirds of the UK’s heavy energy users — crucial industries that produce goods from glass and ceramics to fertilisers, paper and steel.

Before the German takeover, the UK government had been on standby to take over GM&T and Gazprom Energy amid fears that one or both could collapse.

Gazprom Energy had also been considering a rebrand as it sought to distance itself from its Russian owners after the invasion of Ukraine. It is not expecting to revert to Russian ownership, two people close to the company have said.

GM&T and Gazprom Energy had not replied to requests for comment at the time of publication.

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