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Germany taking 'necessary' precautions following new Russia gas sanctions

Highlights

Moscow sanctions former Gazprom units in Europe

Includes Gazprom Germania, GM&T, Wingas, Astora

Germany took over control of Gazprom units in April

Germany is taking the "necessary" precautions to ensure gas supply security after Russia imposed sanctions against former Gazprom subsidiary companies across Europe, the German economy ministry said late May 11.

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Moscow on May 11 listed Gazprom Germania and dozens of its subsidiary companies in a new sanctions designation published on a government website as a response to EU measures against Russia.

The German regulator, the Bundesnetzagentur, took on the role of Gazprom Germania shareholder at the start of April in order to guarantee Germany's security of supply after Berlin said it had not approved the sale of the unit by Gazprom to a third-party company called Palmary.

It is unclear what impact the new Russian sanctions designation could have on Russian gas supplies to Europe, though Gazprom Export is said to have supply contracts with entities held under the Gazprom Germania asset umbrella.

"We are evaluating these announcements. We don't have any details yet," a spokesperson at the German economy ministry said.

"The government and the Bundesnetzagentur, as Gazprom Germania's trustee, are already in the process of taking the necessary precautions and preparing for various scenarios," the spokesperson said.

"The gas crisis team is closely monitoring the current situation. Security of supply is currently guaranteed and is constantly being checked."

European gas prices were trading higher early May 12, with the TTF month-ahead price up at Eur105/MWh ($109.72/MWh) as of 0815 GMT, according to ICE data.

The contract was last assessed May 11 by S&P Global Commodity Insights at Eur94.90/MWh, 280% higher year on year.

'Critical' infrastructure

The economy ministry said that Gazprom Germania operated "critical" gas infrastructure in Germany and was therefore of significant importance for the country's gas supply.

Gazprom said on April 1 that it had terminated its participation in Gazprom Germania and all of its assets on March 31, in a move that took the German authorities and the gas market by surprise.

Gazprom Germania was a 100%-owned subsidiary of Gazprom Export, itself a wholly-owned unit of Gazprom.

European assets held under the umbrella of Gazprom Germania include trading and storage companies such as London-based Gazprom Marketing & Trading, Switzerland-based Gazprom Schweiz, Germany-based traders WIEH, and Wingas, and Astora.

A total of 31 former Gazprom subsidiaries based across Europe were listed on the new Russian sanctions designation on May 11.