Gazprom has lost control of European UGS and trading

Gazprom has lost control of Germany’s Astora underground gas storage (UGS) operator, according to a gas monopoly statement issued on April 1. The release explains that on March 31, Gazprom’s subsidiaries withdrew from the capital of Gazprom Export Business Services, the sole owner of Gazprom Germania GmbH. Who became the new holder is not specified in the message.

Vedomosti sent a request to Gazprom.

Gazprom Germania GmbH includes the WINGAS / WIEE distributor, the operator of the Astor UGS. In addition, the German subsidiary of the Russian gas monopoly also includes Gazprom Marketing & Trading (GM&T), which also includes liquefied natural gas trader Gazprom Global LNG. According to Interfax, Gazprom Germania GmbH’s turnover in 2020 amounted to 13 billion euros.

Astor is one of the largest UGS operators in the European Union. It manages underground storage facilities in Germany and Austria with a total volume of about 6 billion cubic meters. m of gas (UGS “Reden”, “Haidach”, “Yemgum” and “Etzel”, also “Gazprom” uses UGS “Bergermeer” in the Netherlands). In general, Gazprom owns stakes in European UGS with a total capacity of about 10 billion cubic meters. The total capacity of all EU and UK UGS is about 108 billion cubic meters. m.

Gazprom’s exit from its assets in Europe came amid reports in the media about the possible nationalization of the company’s property in Germany in the event of a cessation of Russian gas supplies. This was reported on March 31 by the German newspaper Handelsblatt, citing sources in the German government.

On Wednesday, March 30, Bloomberg sources reported searches of the offices of Gazprom Germania and Gazprom’s subsidiary Wingas, which could have led to an investigation by the EU’s antitrust regulator over gas supplies. In particular, the antitrust regulator is examining Gazprom’s possible involvement in rising gas prices in Europe to record levels.

Earlier, Bloomberg sources also said that the British authorities are considering the possibility of temporarily nationalizing GM&T (introduce a “special management regime”). The situation around Russian gas supplies to the EU has intensified since the beginning of Russian military special operations in Ukraine on February 24, the goals of which, according to officials, are denazification and demilitarization, as well as protection of the Donbass population.

In response, the EU, Britain and the United States imposed several packages of sanctions against Russia (including freezing Russia’s international reserves by about $ 300 billion and restricting access to the euro), and Russia demanded that unfriendly states transfer gas bills to rubles. The relevant decree of Russian President Vladimir Putin came into force on April 1, 2022. It provides for the opening of foreign currency and ruble accounts by the gas buyer company in the authorized bank, which is Gazprombank (GPB). Gas supplies must be paid for by transfer to a currency account, after which the bank exchanges this currency for rubles on the Moscow Stock Exchange and credits them to the ruble account of the buyer, who transfers it to Gazprom.

A Vedomosti source familiar with the preparation of the new payment scheme said that the presidential decree referred to gas that would be supplied to the EU on April 1. According to him, payments for him under one contract “are provided in the second half of April, according to others – in May.” Earlier, EU and G7 officials (Britain, Germany, Italy, Canada, France, Japan and the United States) said they did not intend to transfer payments for Russian gas from euros and dollars to rubles, as existing long-term contracts do not. In turn, the press secretary of the Russian president Dmitry Peskov stressed that gas from Russia will not be supplied free of charge.

Gazprom’s decision to withdraw from Gazprom Germania GmbH is due to the risks associated with the actions of unfriendly countries and the German government, said Alexei Grivach, deputy director general of the National Energy Security Fund. At the same time, the expert noted that the EU itself will suffer from these actions. “Europe’s energy security is already at stake due to statements by their politicians and officials about the transition to a new payment scheme and longer decisions to abandon Russia’s energy,” he said, noting that Europe had begun to develop a phasing-out model. from Russian gas in the early 2000s.

According to the analyst, given the global political tensions, Germany was indeed able to “either take away UGS from Gazprom, or oblige the company to fill the repositories contrary to commercial logic.” The need to fill UGS by 90% by October 1, 2022 was previously discussed in the European Commission. “In general, this is bad news in terms of prospects for normalization of relations [между Россией и ЕС]”, – concludes Grivach.

Alexander Frolov, Deputy Director General of the Institute of National Energy, pointed out that now it is only a matter of Gazprom losing its status as the operator of the four largest European UGSs. But if the political situation continues to deteriorate, the company may also sell its shares in these repositories.

Against the background of aggravated relations due to the conflict over Ukraine in the EU, high gas prices remain, the peak of growth in 2022 fell on March 7 – then at the TTF hub in the Netherlands 1000 cubic meters. m traded at almost $ 4,000, which is the absolute historical maximum. According to the ICE exchange, on April 1 at the TTF May gas futures cost about $ 1430 per 1,000 cubic meters. m.

In 2021, Gazprom, according to the International Energy Agency (IEA), supplied about 155 billion cubic meters to the EU. m of gas. At the same time, the IEA has previously developed and published a plan, the implementation of which will replace about 50 billion cubic meters. m of Russian gas. It provided for both diversification of supplies and regulatory measures, including a recommendation to lower house temperatures by 1 degree Celsius during the winter.

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