Germany works to reduce Russia’s control over important energy facilities – POLITICO

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After years of adapting to Russia’s oil and gas interests, Germany is now trying to loosen its grip and regain control of its critical energy infrastructure.

Berlin is trying to force Kremlin-backed Gazprom to sell important gas storage facilities across Germany, which in effect means the expropriation of these facilities, a government official and two other people informed of the plans said.

And Germany’s economy ministry says it is “working hard” to reduce the influence of another Russian state-controlled energy company, Rosneft, which owns an oil refinery in the eastern city of Schwedt, which refines about a quarter of the country’s oil supplies.

The government’s sudden focus on storage and refining shows that Russia’s leverage over Germany in the energy sector goes far beyond its great role in supplying Europe’s largest economy with oil and gas.

The war in Ukraine has been a wake-up call for Germany’s political establishment, where there has long been a consensus that cheap gas from Moscow is not only good for business but also gives Russia an incentive to stay international.

Alarm bells began ringing even before Russian President Vladimir Putin launched a full-scale invasion of Ukraine in February.

In the run-up to this winter, gas at three major storage facilities in Germany owned by Gazprom – including Reden, one of the largest of its kind in Western Europe – fell to a suspiciously low level, raising concerns that Russia has supplied less gas than usual to artificially raise energy prices and increase pressure on Germany and the EU on the eve of the war in Ukraine.

“A situation similar to the one this winter should not happen again. Therefore, we are doing everything possible to prevent this from happening,” said Andreas Rimkus, Social Democrat (SPD) MP Olaf Scholz. specializes in energy policy.

“In the case of anti-market behavior, the possibility of government intervention should be carefully considered,” he added.

Michael Cruz, a spokesman for the Free Democratic Party (FDP), which is part of Scholz’s ruling coalition along with the Green Party, backed the view.

“Russia has been strategically investing in refineries and gas storage facilities for many years and is now using them as weapons against us. We cannot stand aside as a sovereign state as long as the authoritarian regime twists us and tries to blackmail us, ”he said. .

“Russian companies must hand over energy storage facilities in Germany as soon as possible,” Cruze said, noting that 55 percent of gas supplies to Germany come from Russia.

“Russia has abused this dominant position and allowed the gas storage to dry before winter,” he continued. “Therefore, the German government must act now and classify gas storage facilities as critical infrastructure, which would make it possible to order a sale from Russian property.”

In a move that appears to be linked to the government’s views, Gazprom announced on Friday that it had “stopped its involvement in the German company Gazprom Germania GmbH and all its assets”, although it was not immediately clear who would become the new owner and who. the consequences this will have for gas supply and gas storage. Gazprom Germany owns trade and warehousing assets.

The Kremlin does not care

German politicians, including former Chancellor Angela Merkel, have for years rejected warnings from the United States, Eastern Europe and experts that Germany is increasing its dependence on Russian energy imports. Berlin has also allowed companies such as Gazprom to acquire critical infrastructure, such as gas storage facilities.

Foreign Minister Annalena Burbock acknowledged earlier this week that the policy “is now taking revenge in the most brutal way”.

A representative of the Ministry of Economy did not comment on plans to force Gazprom to sell its storage facilities. However, the spokesman confirmed that work is underway to reduce Rosneft’s influence in the energy sector.

The German daily Handelsblatt on Friday also reported on the government’s plans to potentially expropriate assets of Gazprom and Rosneft in Germany.

As for gas storage, the European Commission’s legislative proposal presented last month paves the way for such government intervention. The proposal calls on countries “to identify gas storage as critical infrastructure and to introduce provisions to combat the risks of ownership of gas infrastructure”, which means that the authorities “assure that the possession of a person or persons from a third country does not jeopardize security of supply”.

In an unusual step that underscores the seriousness of the situation, the Commission’s text says that while the proposal is still awaiting legislative approval – a step that could take several months – EU countries “must act as if the legislation is already in force and take steps to replenish repositories.” in time for next winter. “

Last week, Germany also passed legislation requiring gas storage suppliers to fill their capacity by 65 percent by August 1, by 80 percent by October 1, and by 90 percent by December 1.

This legislation, combined with the EU proposal, allows Germany to significantly increase pressure on Gazprom and potentially expropriate its gas storage facilities, said Claudia Kemfert, head of energy at the German Institute for Economic Research (DIW Berlin).

“If it is found that Russian operators are not filling the repositories properly – and there is a clear first deadline with a requirement to fill the 65 percent level by August 1 – the government can intervene,” she said.

Tekla von Bülow of the consulting firm Aurora Energy Research said that the forced sale of Gazprom-owned repositories could proceed fairly quickly with the participation of German investment bank KfW or a federal company, meaning Berlin will not have to wait until an interested buyer can be found. .

However, she stressed that “such a sovereign intervention in corporate ownership” could require the government to move to the third level of its emergency gas supply plan (Berlin activated the first level this week) and get the approval of the German parliament.

Cruz reduced the risk of Russian lawsuits against such actions, saying that if gas storage facilities are critical infrastructure, “the legal situation is clear.”

As for the oil refinery in Sweden, which is owned by Rosneft, the Ministry of Economy said it was ready to take action.

“We are well aware of the problem,” the spokesman said. “The German government is making every effort to solve this difficult problem.”

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