Germany Nationalizes Gazprom’s German Business to Secure Energy Supply
November 15, 2022 3 min 451 words
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BERLIN—Germany will nationalize key German and European arms of Russian natural gas giant Gazprom PJSC and spend more than 13 billion euros, equivalent to $13.44 billion, to shore up the business in a bid to guarantee energy supplies, the German government said Monday.
Berlin in March assumed management of the assets of Gazprom Germania GmbH, changing the company’s name to Securing Energy for Europe GmbH or SEFE. The government said it had to secure vital energy infrastructure and supplies in the early days of Moscow’s invasion of Ukraine.
The former Gazprom Germania was brought to the brink of insolvency after Russia put it under sanctions and cut it from gas supplies. In March, Gazprom changed the ownership structure of its German subsidiary, a move that violated German laws and prompted Berlin to assume stewardship of the business.
“Because of the systemic relevance of SEFE for the energy supply in Germany the Government is taking capital measures to establish clarity of ownership, stabilize the company and secure the supply of gas,” the government said in a statement.
Berlin was initially opposed to nationalizing the business in part because of its opacity and the unknown liabilities the move could create. Based in Germany, the former Gazprom Germania owned several companies across the world and a large derivatives portfolio handled by a subsidiary in London.
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After failing to find buyers for the more transparent and healthier assets, including gas stores and pipelines, Berlin opted for full nationalization and an injection of funds aimed at stabilizing the business, which, among other things, operates the country’s largest gas storage facility.
As part of the decision, the government will add €2 billion to a €11.8 billion loan extended to the company earlier this year and swap the loan for equity, subject to European Union approval.
In September, Berlin nationalized Uniper SE, Germany’s largest gas importer, which had heavily relied on Russian supply. Uniper posted a loss of more than $39 billion in the first nine months of the year. The loss, one of the largest in German corporate history, will ultimately be passed on to German taxpayers.
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The nationalization of the former Gazprom business will see the German taxpayer pick up the tab for €300 million in bonuses paid to traders working at the London office, as well as for the pay of around 70 Gazprom employees that were transferred from St. Petersburg, Russia, to Dubai after Moscow’s invasion of Ukraine, according to an executive at the company.
Officials said Monday that it remained unclear whether parts of the now state-owned business would be sold to private companies in the future.
Write to Bojan Pancevski at [email protected]