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Germany could lend up to $10.4 billion (10 billion euro) to bail out a former unit of Russia’s Gazprom, which the German government expropriated earlier this year, sources with knowledge of the matter told Bloomberg on Monday.
Gazprom Germania GmbH was the German unit of Gazprom until a few months ago before the German government placed Gazprom Germania under the trusteeship of the German energy regulator in April to ensure security of supply after Russia invaded Ukraine.
Last month, Gazprom halted gas supply to Gazprom Germania in retaliation for Western sanctions, as Russia imposed sanctions on Gazprom’s subsidiaries in Europe, banning them from supplying Russian gas.
Without Russian gas, Gazprom Germania has had to buy gas at higher prices on the spot market.
Gazprom Germania has several storage sites in Germany, including the biggest one in the country. Without financial support, the firm may be unable to fill the gas storage to the levels Germany and the EU require before next winter to prevent gas shortages.
Now, according to Bloomberg’s sources, the German government, via state-held bank KfW Group, could approve a loan of between $5.2 billion (5 billion) and $10.4 billion (10 billion) to Gazprom Germania. This loan could come as early as this week, the sources told Bloomberg, adding that plans are not final and could still change.
The Federal Network Agency of Germany, Bundesnetzagentur, told Bloomberg it wouldn’t comment on speculation, noting that all parties involved with Gazprom Germania are “working intensively to keep business operations going.”
Europe’s largest economy, Germany, is a major buyer of Russian natural gas and has been preparing for nearly three months for the possibility that fossil fuel supplies from Russia could be disrupted either because of sanctions or retaliatory moves from Moscow to cut—or cut off—the supply of natural gas.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com