The German federal network regulator has urged the customers, partners, and banks working with the German unit of Russian gas giant Gazprom to keep doing business with the company so as to avoid insolvency of Gazprom Germany and a possible threat to gas supply.
"Without being able to procure operating resources or offer services, the operational business would be at risk, while without access to financial resources, the group could face insolvency," Germany's Federal Network Agency, known as BNetzA, wrote in a letter seen by Bloomberg.
If banks and partners shun Gazprom Germania, as the unit is known, the company could become insolvent and threaten the security of gas supply in Germany, according to the German agency.
Gazprom Germania, based in Berlin, operates large gas storage facilities.
"The consequences for the energy supply system, not only in Germany but in Europe as well, would be severe," the German regulator said in the letter seen by Bloomberg.
Germany receives around half of the natural gas it consumes from Russia, and it has been one of the main opponents of an energy embargo against Russia over Putin's invasion of Ukraine.
Last week, reports emerged that Germany was mulling over the potential nationalization of the local units of Gazprom and of Russian oil giant Rosneft.
Germany is considering the idea of nationalizing the German units of Rosneft and Gazprom over concerns the companies that are systemically important for the German energy market could run into financial troubles, German business daily Handelsblatt reported last week, quoting sources in the government.
Chancellor Olaf Scholz is also involved in the talks about the potential nationalization of the German units of Rosneft and Gazprom, Handelsblatt reported, citing several government sources. Germany fears a shortage of energy supply if those two companies run into difficulties or become technically insolvent as banks are shying away from funding firms connected to Russia.
By Charles Kennedy for Oilprice.com
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Now we hear that the German federal network regulator has urged the customers, partners, and banks working with the German unit of Russian gas giant Gazprom to keep doing business with the company so as to avoid insolvency of Gazprom and a possible threat to gas supply not only to Germany but the EU too.
Germany as the biggest economy in the EU and the EU itself know full well that that they will continue to be dependent on Russian oil and gas supplies well into the future.
Soon level heads in Germany will approach the issue of Nord Stream 2 gas pipeline in the same way they are approaching the local units of Gazprom and Rosneft. They will realize that Nord Stream 2 is very vital for Germany’s and the EU’s energy security.
Germany and the EU will soon realize that in banning Russian coal exports, they will have to replace them with coal from other sources. But the minute they announced the ban, coal prices shot up. As a result, Germany and the EU will be paying much higher prices to replace Russian coal imports and that adds a big financial burden on its budget.
If the EU decides to follow the ban on coal with one on Russian oil and gas, prices will skyrocket to levels that will plunge the EU economy into its worst energy crisis in its history with its economic growth reduced to almost zero. The cost of living is already rising across the EU and governments are struggling to rein it in.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London