Germany is working to cut back on Russian control of critical energy plants – POLITICO

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After spending years enjoying Russian oil and gas interests, Germany is now struggling to loosen its grip and regain control of its critical energy infrastructure.

Berlin is looking to force Kremlin-backed Gazprom to sell critical gas storage facilities across Germany, which in effect means an expropriation of those sites, said an official and two other people who briefed on the plans.

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

The government’s sudden focus on storage sites and the refinery highlights how Russia’s influence over Germany in the energy sector goes far beyond its major role in supplying Europe’s largest economy with oil and gas.

The war in Ukraine has served as a wake-up call to Germany’s political establishment, where the consensus had long been that cheap gas from Moscow was not only good for business, but gave Russia an incentive to remain in the international fold.

The alarm bells started ringing even before Russian President Vladimir Putin launched his extensive invasion of Ukraine in February.

Prior to the current winter, gas at three major storage facilities in Germany owned by Gazprom – including one in the city of Rehden, among the largest of its kind in Western Europe – fell to suspiciously low levels, raising concerns that Russia had supplied less gas than usual to artificially push up energy prices and increase pressure on Germany and the EU ahead of the war in Ukraine.

“A situation like the one we had this winter must not repeat itself. That is why we are doing everything we can to ensure that this does not happen,” said Andreas Rimkus, legislator from Chancellor Olaf Scholz’s Social Democrats ( SPD), which specializes in energy policy.

“In the case of behavior that goes against the market, it is right to look closely at the possibility of government intervention,” he added.

Michael Kruse, energy policy spokesman for the Free Democratic Party (FDP), which is part of Scholz’s governing coalition with the Greens, backed that view.

“Russia has for years invested strategically in refineries and gas storage facilities and is now using them as a weapon against us. We can not stand by as a sovereign state while an authoritarian regime puts its finger on us and tries to blackmail us,” he said. he said. .

“Russian companies need to hand over energy storage facilities in Germany as soon as possible,” Kruse said, pointing out that 55 percent of Germany’s gas supply came from Russia.

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

In a move that appears to be related to the government’s considerations, Gazprom announced on Friday that it had “terminated its participation in the German company Gazprom Germania GmbH and all its assets,” although it was not immediately clear who would be the new owner and what consequences this would have for the gas supply and gas storage. Gazprom Germania owns trading and stock assets.

No worries from the Kremlin

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

Secretary of State Annalena Baerbock admitted earlier this week that this policy “now takes its revenge in the most brutal way.”

A spokesman for the Ministry of Economy had no immediate comment on the plans to force Gazprom to sell its storage facilities. However, the spokesman confirmed that efforts are being made to reduce Rosneft’s influence in the energy sector.

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

When it comes to gas storage, a bill from the European Commission presented last month paves the way for such state intervention. The proposal calls on countries to “identify gas storage as a critical infrastructure and introduce provisions to deal with ownership risks for gas infrastructure”, meaning that the authorities “certify that ownership of a person or persons from a third country does not bring security of supply.”

In an unusual move, highlighting the seriousness of the situation, the Commission’s text says that while the proposal is still awaiting regulatory approval – a step that could still take months – EU countries should “act as if the legislation was already in place and take action to ensure that the stock is replenished in time for next winter. “

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

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

“If it turns out that Russian operators are not filling up the storage facilities accordingly – and there is a clear first deadline with the filling level requirement of 65 percent before August 1 – the government can intervene here,” she said.

Thekla von B├╝low of the consulting firm Aurora Energy Research said that the forced sale of Gazprom-owned warehouses could proceed fairly quickly by involving the German investment bank KfW or a federally owned company, meaning Berlin would not have to wait until an interested buyer could be found. .

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

Kruse downplayed the risk of Russian lawsuits against such acts, saying that if gas storage sites are classified as critical infrastructure, “the legal situation is clear.”

When it comes to the Rosneft-owned refinery in Schwedt, the finance ministry said it was determined to take action.

“We are well aware of the problem,” a spokesman said. “The German government is working hard to solve this complex problem.”

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