Berlin prepares multi-billion euro bailout for Gazprom Germania

Berlin is preparing a multi-billion euro bailout for Gazprom Germania, the subsidiary of the Russian gas giant which was bought by German authorities last month, according to people familiar with the matter.

As part of the bailout, Germany’s state-owned development bank KfW would provide Gazprom Germania with a €5-10 billion loan, the sources said, while stressing talks were ongoing.

Using taxpayers’ money to bail out a company still officially owned by Gazprom, the Kremlin-controlled energy company, could prove controversial in Germany.

But the unit plays an important role in Germany’s energy supply, and as such officials believe it is in the national interest to restore it to financial health.

The German government took control of Gazprom Germania and its subsidiaries in early April, placing them under the supervision of the Bundesnetzagentur, the federal energy regulator.

This decision was triggered by a change in the ownership structure of the entity which violated the strict German law on foreign investment in critical infrastructure.

Gazprom Germania owns a number of gas storage facilities in Germany, including the country’s largest, Rehden; the gas distribution company, Wingas, which supplies large industrial consumers in Germany; and a British GM&T trading division.

Russia retaliated against the takeover of Gazprom Germania in May by cutting the volumes of gas it supplies to the company, forcing it to buy gas on the spot market, often at higher prices.

This, officials said, risked destabilizing its finances, which in turn would hurt its ability to meet its supply obligations to customers in Germany. These include some of the largest industrial companies in the country, as well as municipally owned utilities.

A spokesman for the Bundesnetzagentur said that all state agencies were “working intensively to ensure that [Gazprom Germania] can continue to operate. Asked about the loan, he said the BNA would not comment on speculation. The German government declined to comment, as did KfW.

This month, Gazprom Germania appointed Egbert Laege, a former Boston Consulting Group executive, as managing director. In an email announcing the move, Laege thanked his predecessor Igor Fedorov “for his services to GPG Group” and wished him “all the best for the future”.

The decision to bail out Gazprom Germania should allow GM&T to restart transactions. GM&T is a major trader of gas, liquefied natural gas and electricity, buying from sources such as Norway and the North Sea and selling around the world.

It also buys gas for Gazprom Energy, which supplies around a fifth of all non-domestic gas in the UK to around 30,000 commercial customers, including shops, pubs, NHS trusts and local authorities, as well as two-thirds of the UK’s heavy energy. users – crucial industries that produce goods ranging from glass and ceramics to fertilizers, paper and steel.

Prior to the German takeover, the British government was prepared to take over GM&T and Gazprom Energy, fearing that one or both would collapse.

Gazprom Energy was also considering a name change as it sought to distance itself from its Russian owners after the invasion of Ukraine. It does not expect to return to Russian ownership, two people familiar with the company said.

GM&T and Gazprom Energy had not responded to requests for comment at the time of publication.

Alycia R. Lindley