The German Government has pledged to support Gazprom Germania, a subsidiary of Russia’s gas giant Gazprom, by saving it from insolvency with a €10billion (£8.6billion) loan as Berlin scrambles to avoid the impacts of a Russian gas squeeze. This comes after Gazprom announced it would slash gas deliveries travelling through Nord Stream 1, the main pipeline supplying Germany with Russian gas, by up to 40 percent.
Gazprom claimed this was “due to the delayed return of gas compressor units from repair by Siemens”, arguing only up to 100 million cubic metres of gas could be pumped through the pipeline daily.
This is around 60 percent of the daily volume that had been planned previously, at 167 million.
Gazprom said in a statement on Telegram: “From 1.30am Moscow time on June 16 the daily output of the Portovaya compression station will be up to 67 million cubic metres per day.”
But Germany’s Vice Chancellor Robert Habeck claimed the move is a “political decision”.
He argued Russia is using this as a pretext to push up gas prices, as has been the case previously with other gas supply cuts.
Mr Habeck said: “That’s obviously the strategy here.”
While Germany is hugely reliant on Russia for gas, depending on the Kremlin for 40 percent of its total supplies, Gazprom Germania is also crucial for Germany’s energy security.
This may help to explain why the German Government is keen to support Gazprom Germania, which according to Government sources, will involve a sum of between nine and ten billion euros.
The Federal Government in Berlin said: “With this approach, the Federal Government retains influence over this part of the critical energy infrastructure and prevents energy security from being jeopardised.”
Germany’s Federal Finance Minister Christian Lindner (FDP) said on a visit to Sofia: “To secure the energy supply, the Federal Government will ensure the company’s ability to act.”
The company, which is now under German state control, started to struggle after it was hit with Russian sanctions.
Russia imposed sanctions on Gazprom Germania and almost all of its subsidiaries in mid-May which sparked “financial imbalance” for the company, according to the German Government.
The sanctions also meant that gas deliveries were cancelled, meaning procuring replacements at very high market prices, with prices also driven up by the war in Ukraine.
While Germany is hugely depending on gas that travels through Nord Stream 1, Berlin has said the security of gas supply is guaranteed.
A spokeswoman for the Ministry of Economics said: “We are monitoring the situation and examining the facts.”
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She added: “The full facts and possible effects of the declining flows from Nord Stream 1 are being further examined.”
This also comes after Russia threatened to cut gas from “unfriendly countries” refusing to pay for the Kremlin’s gas in rubles after setting a March 31 deadline.
But the EU warned that submitting to Putin’s request and paying for gas in the Russian currency would undermine western sanctions.
Back in April, German Chancellor Olaf Scholz warned that his country should expect a future supply cut from Russia.
He said: “You have to be prepared for that, and we were already prepared before the war started and we know what we have to do.”
Additional reporting by Monika Pallenberg.