The pocket does not pull gas – Newspaper Kommersant No. 211 (7412) dated 11/15/2022

Germany is the first among the EU states is going to nationalize assets associated with Russia. We are talking about the former division of Gazprom, Gazprom Germania, which is now renamed SEFE. Such measures are explained by the desire to avoid the bankruptcy of SEFE. In the meantime, the Polish authorities intend to transfer Gazprom’s stake in Europol gaz, which owns the Polish section of the Yamal-Europe gas pipeline, under compulsory control. According to analysts, Gazprom in response may try to seize the assets of German state-owned companies in Russia.

The German authorities announced their intention to nationalize the former European division of Gazprom Securing Energy for Europe GmbH (SEFE), formerly known as Gazprom Germania. As the German Ministry of Economy announced on November 14, the government wants to acquire a 100% stake in SEFE to protect it from bankruptcy, and increase the company’s loan from KfW development bank from €11.8 billion to €13.8 billion. Most of this loan will then be converted into share capital of the company.

The former Gazprom Germania GmbH and its assets are of systemic importance to the German energy system.

It included the London-registered trader Gazprom Marketing & Trading Ltd, which traded gas throughout Europe, the UGS operator in Europe and Austria, Astora, as well as the German sales companies WIEH and Wingas. After the outbreak of hostilities by the Russian Federation in Ukraine and against the backdrop of a decrease in gas supplies from Russia, the German Ministry of Economy instructed to transfer Gazprom Germania under the control of the Federal Network Agency. In May, the Russian Federation imposed retaliatory sanctions by banning any transactions with Gazprom Germania group companies. Until now, the legal status of the owners of the company remained uncertain.

The German authorities attributed the nationalization to SEFE’s impending insolvency, which would jeopardize the security of gas supplies to Germany. “In order to prevent this danger and preserve the operational activities of SEFE, a change of ownership and stabilization of the company is currently underway,” the regulator said in a statement. SEFE’s loss this year at the end of October was €2 billion.

On November 12, the European Commission approved the nationalization scheme. It consists in the fact that the existing authorized capital of SEFE in the amount of €225.6 million “will be reset to zero, which will effectively put an end to the ownership of the current Russian shareholder.” Thereafter, SEFE GmbH will issue new ordinary shares with the same par value.

“Thus, this measure will not change the share capital of SEFE GmbH,” the European Commission explained.

SEFE is the second after Uniper a German company nationalized by the German authorities as a result of the energy crisis.

This is also the first case of the complete nationalization of the assets of Russian state-owned companies in Europe: so far it has been about the introduction of various restrictions or external management, but not about the change of ownership.

At the same time, on November 14, the Polish authorities introduced external management of Gazprom’s 48% stake in Europol gaz, a joint venture with the Polish state company PGNiG, which owns the Polish section of the Yamal-Europe transit gas pipeline. “We are doing everything possible to counter Russian aggression and eliminate Russian capital and influence. Expropriation is not possible under the Polish constitution, so we decided to introduce mandatory governance,” Polish Development Minister Waldemar Buda explained on November 14.

In September, Poland imposed sanctions on Gazprom, thereby freezing its rights to shares and the payment of dividends. The Russian Federation in May suspended gas supplies to Poland after Warsaw refused to pay for it in rubles.

Gazprom did not provide any comments.

Russia currently does not supply gas to Poland, and supplies to Germany are insignificant, so the decision on nationalization is unlikely to somehow affect the situation in the gas market of these countries, Sergey Kondratiev from the Institute of Energy and Finance believes.

In theory, Russia could try to limit LNG supplies, but this is not technically easy to do: the LNG market is global, and the supplier does not always know the end user.

“I think Gazprom will try to challenge the decision in court. Potentially, the company may try to seize state assets or assets of state-owned companies from these countries in Russia and friendly states,” he believes.

The energy company Unipro now operates in Russia, 83.7% owned by Uniper, and Uniper itself is now controlled by the German authorities. Unipro is one of the companies whose foreign shareholders, according to the decree of the President of the Russian Federation, must obtain a special permit for transactions with their blocks of shares.

Tatyana Dyatel