Berlin props up Gazprom subsidiary with €10 billion loan –

German Finance Minister Christian Lindner said he could not speculate on how high the loan from the KfW state investment bank to keep Gazprom Germania from insolvency would end up being, but sources place the figure in the region of €10 billion.

In April, the Russian-state-owned company was put into temporary administration following its invasion of Ukraine. Gazprom then cut its ties with the German subsidiary leading the government to take temporary control of it to protect the gas supply flowing into the country.

“They are only guarantees,” said Lindner during a trip to Sofia, which is why there would not be an implication for the federal budget, he added.

The company has played a vital part in securing energy for Germany, and the loan aims to prop up its role in facilitating gas supplies and preventing insolvency.

“In order to ensure security of supply, the Federal Government is extending and strengthening the trusteeship of Gazprom Germania,” tweeted Steffen Hebestreit, head spokesman of Chancellor Olaf Scholz, on Wednesday.

“In addition, the company is granted a KfW [state bank] loan. This protects it from insolvency and secures its important business operations,” he added.

The news of the loan, reported by AFP to be in the region of €10 billion, has sparked outrage in Germany despite the government saying the money would be ring-fenced while ensuring it “only be used for GPG’s business operations and to maintain the gas supply and cannot flow to Russia.”

Observers have not necessarily been amused. “We are now saving Russia’s Gazprom (!) Germania with German tax money! Why doesn’t our chancellor just finance the Russian arms factories directly?” tweeted Paul Ronzheimer, vice editor-in-chief at German daily BILD.

As the German government has yet to expropriate the subsidiary of Gazprom, it continues to be legally owned by an unknown somewhere in Russia, explained Klaus Müller, head of the federal network agency and steward of Gazprom Germany, in April.

Securing Energy for Europe

Gazprom Germania, the lynchpin in Russian gas flows into Europe, will be renamed “Securing Energy for Europe GmbH” (SEFE) in what could be considered one of the year’s most ambitious attempts at a rebranding.

This also signals to the market that the measures aim to secure the energy supply in Germany and Europe, the press release stated.

The name change follows calls by Russian state-owned enterprise Gazprom to “avoid further identification of its activities with the Gazprom Group,” the company stated via its Telegram channel in April.

Thus, Berlin is very much in for the long haul on keeping ahold of Gazprom Germania (SEFE) and the lucrative low-cost long-term gas contracts tied to the legal shell of the subsidiary of the Kremlin’s golden goose.

Lower flows through Nord Stream 1

The loan announcement and the strengthening of Berlin’s grasp on the company had come amid a significant 40% drop in gas flows through the Nord Stream 1 pipeline.

Gazprom cited maintenance issues for the significant drop, laying the blame at the feet of German company Siemens. The company had allegedly failed to maintain compressors.

“Due to the delayed return of gas compressor units from repair by Siemens … and technical engines’ malfunctions, only three gas compressor units can currently be used at the Portovaya compression station,” Gazprom said, as Reuters reported.

Siemens pointed toward sanctions levied by Canada as the reason for the delay. “Due to the sanctions imposed by Canada, it is currently impossible for Siemens Energy to deliver overhauled gas turbines to the customer,” the German company said.

Instead, political observers noted that the drop in gas flows ahead of Berlin, strengthening its hold on Gazprom Germania, soon SEFE, may not have been a surprise. “Nobody in Berlin believes in chance,” one said.

[Edited by Alice Taylor]

Show some Love^^