When Germany took full control of Gazprom Germania, the European subsidiary of the Kremlin’s gas arm, it symbolically ended the country’s 52-year gas entanglement with Russia. However, few realised that it would make Berlin Europe’s new major player and supplier in the energy world.
More than half a century ago, the project was started as a brainchild of Willy Brandt, the initial driving force behind Germany’s Ostpolitik, the reconciliation of East and West German relations.
Over the next few decades, the project brought normalisation, stability, energy and – in recent months – problems that led to its termination, or transformation.
As of Monday (14 November), the symbol of the Russo-German gas partnership, Gazprom Germania – renamed Securing Energy for Europe (Sefe) – was fully seized by Berlin, following the European Commission’s green light.
The fully-fledged nationalisation also put an end to the confusion surrounding Gazprom at large, one of Europe’s most significant gas trading companies, which included attempts by Moscow to transfer the company to a Russian DJ or dissolve it entirely.
The takeover required the approval of EU competition authorities, who gave their green light on Saturday (12 November), as Germany invested another €225 million and granted an extra €2 billion in loans, upping the total to €13.8 billion.
Why go to all this effort for a company that is bleeding money like a stuck pig, becoming liable for wages of Russian employees that were transferred to Dubai, where it will have to field €300 million in bonuses for traders based in London?
The company is the spider at the centre of a Europe-wide web of lucrative long-term gas contracts held by subsidiaries that continue to shield local utilities and companies from the worst impacts of runaway gas prices.
“Sefe is a key company for energy supply in Germany,” the Economy Ministry said on Monday, noting the key role of Sefe’s subsidiary, Wingas, which has a market share of 20% in the country.
But this is only scratching the surface of the deep well of Sefe-owned gas companies all over Europe – all of which are now in the hand of the German government.
WIEE Hungary, a gas company dealing with industrial customers and wholesalers, is ultimately owned by Sefe. The same goes for WIEE Bulgaria. For Czechia, this applies to energy company Vemex, which holds more than 10% of the country’s market share.
When the Kremlin sanctioned 31 gas companies largely based in Europe in May, it created a public, albeit incomplete, overview of where now-Sefe-owned companies do business across Europe. Yet, to this day, there is no comprehensive overview of Sefe operations to be found.
This is all to say that European gas markets are messy and lack transparency, despite the European Commission pushing for years. The German government now owns a variety of companies fulfilling a plenitude of roles crucial to the functioning of EU states, and Switzerland’s gas markets.
Were any of these countries informed that parts of their critical energy infrastructure would soon be owned by Germany?
I doubt it. When Berlin first put Gazprom Germania under government control, it didn’t inform any of its neighbours. Not a great start to the new market reality we find ourselves in.
Combined with the takeover of energy company Uniper, the German government has become perhaps the biggest player in Europe’s gas markets.
This may not immediately spell doom, but it is a worrying sign that the government in Berlin, burned by Russia, may instinctually keep everything dear near.
Berlin must not succumb to the trauma it is experiencing, because as Poland is nationalising Gazprom assets like the Polish stretch of the Yamal pipeline, it is up to Germany to fight for markets that are free from undue state intervention
But it must also signal to its partners that it has learned its lesson about being naive in such integral matters as energy security.
The path ahead for the world’s fourth-largest economy is thus far from easy.
But surely, becoming the biggest European gas trader is not sustainable. Because, after all, who would trust German decision-making in energy policy these days?
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The Roundup
The German government inaugurated its first floating terminal on Tuesday, built in record time and intended to receive liquefied natural gas as part of Berlin’s plan to replace Russian gas.
Diplomats said that leaders of G20 nations were considering a draft resolution on Tuesday in which most members strongly condemn the war in Ukraine and stress it is exacerbating fragilities in the global economy.
European Parliament negotiators and representatives of the member states reached an agreement on the 2023 EU budget on Monday night (14 November), with the Parliament demanding additional means to address the fallout from the war in Ukraine.
A joint railway project between Uzbekistan, Afghanistan and Pakistan is gaining momentum as it could open up international trade routes, but some caution against collaborating with Taliban-controlled Afghanistan, citing ongoing human rights abuses.
Last but not least, don’t miss the latest Transport Brief: Euro 7 accused of deadly sins.
Look out for…
- College of Commissioners meeting to present a communication on Schengen enlargement.
- Commission Executive Vice President Frans Timmermans and Energy Commissioner Kadri Simson announce EU-Egypt Hydrogen Partnership.
- EU-Australia leaders’ meeting at G20 summit.
- European Central Bank releases Financial Stability Review for November 2022.
Views are the author’s.
[Edited by Alice Taylor/Nathalie Weatherald]
Source: euractiv.com
