Germany will protect Gazprom Germania from insolvency with a loan of up to 10 billion euros | News | DW
The German government announced on Tuesday that it would place Gazprom Germania into long-term administration and provide it with a loan of up to 10 billion euros ($10.4 billion) to prevent the company from becoming insolvent.
The subsidiary of the Russian gas giant Gazprom has been placed under provisional administration following the Russian invasion of Ukraine.
A government spokesman told Reuters news agency that the company will be renamed Securing Energy for Europe GmbH. Funding to keep the company afloat will come from state-owned development bank KfW.
“With this approach, the German government can maintain control over this part of the critical energy infrastructure and prevent threats to energy security,” the government said in a statement.
Why did the German government take control of Gazprom Germania?
Gazprom severed ties with its German subsidiary after Moscow imposed retaliatory sanctions on the daughter company.
A few days later, German authorities took temporary control to protect Germany’s gas supply.
Germany is heavily dependent on Russian gas and has repeatedly rejected calls to impose an embargo on its imports despite the war in Ukraine.
After shutting down its nuclear power plants, Germany has become increasingly dependent on fossil fuels for its energy needs
However, a more immediate reaction to the Russian invasion was to cancel the Nord Stream 2 gas pipeline project which would have increased the capacity to pump Russian gas into Germany, and thus end Russia’s dependence on -Vis to key infrastructure crossing Ukraine.
German energy supply in the balance
Gazprom Germania has played a key role in securing Germany’s energy supply and Tuesday’s loan announcement aims to bolster its role in securing gas supplies and preventing bankruptcy.
The German company is made up of its own subsidiaries such as the storage company Astora, which is in charge of operating some 6 billion cubic meters of underground gas caverns in Germany and Austria.
The bailout announcement came as Russia’s Gazprom said it was cutting gas flow to Germany through the already existing Nord Stream 1 pipeline by 40% due to the need for repairs.
The company cited delays from German company Siemens involved in the repairs, but the move raised concerns after Russia cut off gas to countries including Poland and Bulgaria.
German Vice-Chancellor Robert Habeck said he was working to find alternatives to Russian energy and the government planned to build LNG terminals, but a complete cut off from Russian fuel will take time.
ab/wd (Reuters, dpa, AFP)