Berlin Russia’s gas sanctions are causing growing uncertainty on the energy markets. The punitive measures affect 31 European companies, most notably Gazprom Germania GmbH and some of its subsidiaries, which are responsible for gas trading and storage. Federal Minister of Economics Robert Habeck (Greens) said he sees this as a new stage in the conflict with Russia as an energy supplier. Moscow’s announcements that it would use oil and gas as a weapon have now materialized.
However, Habeck initially considers the concrete effects of the Russian gas sanctions to be “manageable”. Ten million cubic meters of gas are now no longer being delivered from Russia every day, the minister said. Calculated over the rest of the year, the volume corresponds to around three percent of German demand. In Germany, some of the Gazprom subsidiaries “now no longer get gas from Russia,” he said.
From Moscow it was said that the sanctioned companies were completely excluded from gas trading with Russia. Other companies in Europe would now have to take over, said Kremlin spokesman Dmitry Peskov, according to the Russian news agency Interfax.
The amount that is no longer being delivered to Gazprom Germania’s subsidiaries can be replaced, albeit presumably at higher prices, Habeck said. The aim of the sanctions against Gazprom Germania, which is under German control, is apparently to make purchasing more expensive. However, precautions have been taken to financially secure new contracts. The Gazprom Germania subsidiaries that operate gas networks are not affected by the sanctions. So you can continue to supply gas.
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Bundesnetzagentur President Klaus Müller spoke of a “surgical decree” that would allow Russia to continue doing gas deals with Germany. Insiders put it more clearly: the Russian sanctions were aimed at “breaking down Gazprom Germania, but not the German-Russian gas business as a whole.”
Federal Network Agency sees security of supply guaranteed
It is not surprising that Russia is primarily targeting Gazprom Germania with its sanctions. The company has been under the trusteeship of the Federal Network Agency for a few weeks.
The Russian parent company Gazprom had previously tried to sell its subsidiary to two unknown Russian companies. However, according to foreign trade law, this could only have happened with the approval of the Federal Ministry of Economics. The ministry refused the approval and used the Federal Network Agency as a trustee.
The Federal Network Agency also gave the all-clear with regard to the gas sanctions: the supply is stable and the security of supply is guaranteed, according to the authority’s daily status report. Gas quantities missing due to sanctions are currently being procured in full via the European gas market.
Overall, the gas flows to Germany are almost unchanged, it is said. However, a moderate increase in wholesale prices has been recorded, but the increase is within the range of fluctuation of the past few weeks.
The Russian gas sanctions affect 31 European companies, including Gazprom Germania GmbH in particular.
(Photo: dpa)
At present, Russia continues to supply significant amounts of gas through Ukraine. According to the current transit contract, a maximum of 110 million cubic meters of Russian gas can be pumped through Ukraine to Europe every day. According to Russian information, the order volume on Tuesday was still 95.8 million cubic meters. On Wednesday, the gas volume had fallen to 72 million cubic meters.
The reason: Ukraine had closed a line through the heavily contested Luhansk region as a result of the war. Now it has fallen again by more than a quarter. A Gazprom spokesman said Ukraine had rejected an application to feed in more gas through the Sokhranivka gas metering station near the Luhansk border.
Fluctuations in gas transit are common. Comparable quantities have passed through the Ukrainian pipeline system several times in recent weeks. Most recently, the transit volume was similarly low on April 24 at 53 million cubic meters.
And so Habeck currently sees no reason to raise the gas early warning level to alarm. However, the situation could escalate, for example if less gas continues to flow through Ukraine or there are complications with the payment in rubles demanded by Russia.
Federal government relies on additional suppliers
The future payment modalities have been causing unrest for weeks. It is still not clear to everyone in the EU how payments for Russian gas will be made in the future. Italy’s Prime Minister Mario Draghi confused on Wednesday evening by saying that payments in rubles are not a problem. “Nobody has ever said anything about whether ruble payments violate sanctions,” he said.
An EU Commission spokesman did not want to comment on Draghi’s statements. One is constantly in talks with the member states and always ready to clarify open questions, he said.
Commission officials have pointed out in the past that Russia does not require payments in rubles at all, but rather the opening of an account with Gazprombank, where the money is then exchanged for rubles.
What would bother the Commission would be a procedure in which the payment is not considered made until it has been exchanged for rubles. The European corporations should pay in euros and then declare that the payment process has been completed. Whether the money paid is then exchanged should not be their responsibility. The utility RWE said it was in close contact with the federal government and expected clarification shortly.
Two of the special ships are scheduled to go into operation in Germany this year.
(Photo: Bloomberg)
In order to reduce the growing uncertainties in the gas business with Russia, the federal government is doing everything it can to gain additional suppliers and open up new supply routes. In the past few weeks, it has made some progress in close cooperation with the industry.
The expected annual consumption of Russian gas has been reduced from 45 billion cubic meters to 30 billion cubic meters. The rest is now to be compensated for with liquid gas supplies. For this purpose, the Ministry of Economics has secured access to a total of four special ships that act as floating LNG terminals.
Two of them are to be connected to the German gas network by the turn of the year. They have a capacity of five and 7.5 billion cubic meters. The other two ships are to be connected in May next year. Their capacity is ten billion cubic meters each. This means that a total of 32.5 billion cubic meters of natural gas per year can be delivered to Germany via the floating LNG terminals. The German demand could be covered with it – assuming the corresponding LNG deliveries.
>> Read also: Habeck’s plan for the gas supply: Two LNG terminals will go into operation in 2022
However, the Federal Republic is a gas transit country. Gas also reaches Germany via the Russian pipelines and is then forwarded to other countries, such as Austria. In order to cover not only the German but also the European gas demand, another ten to 20 billion cubic meters would be necessary. The federal government is already making plans for where these can come from.
Additional scope will result from another floating LNG terminal that will be installed in Eemshaven in the Netherlands in the third quarter of 2022 and will have an annual capacity of eight billion cubic meters. The pipeline connection from there to the German gas network is to be strengthened. This also opens up new opportunities for gas transit through Germany to countries further south and south-east.
According to the Russian news agency Interfax, stockpiling of Russian gas in Europe’s storage facilities will be banned in the future. The announcement from Moscow raises questions, especially among German energy companies. They couldn’t say much on Thursday.
In Germany there are 47 underground storage facilities at 33 locations operated by around 25 companies. In addition to the Gazprom-Germania subsidiary Astora, which operates the largest single storage facility in Rehden, the Düsseldorf group Uniper has the most storage facilities. The company accounts for around a quarter of Germany’s storage capacity.
But the new counter-sanctions from Russia also came as a surprise to Uniper. “We are examining this in detail,” said a company spokesman. In particular, details of the ban on filling the gas storage facilities are unclear.
The German gas storage facilities are almost 40 percent full. Only the Gazprom storage facility in Rehden is still at 0.5 percent and is therefore as good as empty.
(Photo: Getty Images)
EnBW is also still at a loss: “We have taken note of the list of sanctions and are examining the effects,” said a spokesman for the supplier on request. The Baden-Württemberg company operates around five storage facilities in Germany together with its subsidiary VNG.
RWE also operates several storage facilities in western Germany. “As of today, we don’t see any effects on our own storage systems,” said RWE CFO Michael Müller at a press conference on the occasion of the quarterly figures on Thursday. You book capacities as usual and make feed-ins.
In the past few weeks, the filling levels have increased significantly. The German gas storage facilities are almost 40 percent full. Two months ago they were just over 20 percent. Only the Gazprom storage facility in Rehden is still at 0.5 percent and is therefore as good as empty.
The Federal Network Agency, as trustee of the Astora storage, now wants to change that and announced that the storage will be refilled by next winter. It remains questionable whether this is still possible with gas from Russia after the new sanctions announced by the Kremlin.
“Russian government apparently wants to prevent storage processes”
Anna von Bremen, energy lawyer at the Raue law firm, says: “The Russian government apparently wants to prevent storage processes. How this is supposed to work legally is not clear to me.” Gas importers did not receive gas from Russia for a specific purpose. “The companies have huge procurement portfolios and are free to use the gas as part of the supply contracts,” says von Bremen. The Russian government can see from the publicly available gas storage levels in which storage gas is being filled.
But von Bremen says: “Based sanctions on this publicly available information would be extremely unsafe, because according to the new specifications in the EnWG [Energiewirtschaftsgesetz] Storage capacities can also be withdrawn and given to third parties.” It is not public which company is behind a specific storage process. Therefore, the sanctions are more likely to be understood in the sense of a general trade ban.
Uniper could also be affected if the Russian sanctions also affect the owner who operates the Polish part of the Yamal pipeline, which runs from Russia to Europe. Because Uniper not only operates storage facilities, but also imports gas from Russia to Europe via various pipelines. The company has not yet been able to say how much gas would be lost if Uniper could no longer import via the Yamal pipeline. However, it assumed that it would be able to fill up its own storage sufficiently in time for winter.
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