Germany faces €5bn bill after Russia sanctions Gazprom division
Russian sanctions against Gazprom Germania could cost Germany an extra €5bn a year to pay for replacement gas supplies, after Russia decided to stop supplying the energy division.
Gazprom Germania was previously a subsidiary of state-backed Gazprom before it was ditched by its parent company.
This followed the German government putting the company under trustee management after Russia’s invasion of Ukraine.
Since then, the German energy regulator, acting as trustee, has had to buy replacement gas on the market to fulfil supply contracts with German municipal utilities and regional suppliers.
The economy ministry estimates an extra 10m cubic meters per day are required.
A spokesperson told news agency Reuters: “The quantities are procured on the market and at market prices. No information can be given on the exact amounts due to commercial confidentiality.”
German newspaper Welt am Sonntag has estimated the current cost would be around €3.5bn, while further costs could arise from the filling of the Rehden natural gas storage facility – which Economy Minister Robert Habeck ordered last week.
The paper revealed the additional costs would be passed on to energy suppliers and end customers in the form of a gas levy from October.
While Germany dropped its opposition to a ban on Russian oil imports, the country remains dependent on Russia for around half of its gas imports.
This is above the European Union (EU) average, with the trading bloc reliant for approximately 40 per cent of the oil it buys.
It has not joined calls for a potential ban on Russian gas supplies, with only Lithuania unilaterally bringing in an embargo earlier this year.
Germany has brought in early-phase emergency plans, which could lead to the government taking control of the country’s gas supplies, following Russian President Vladimir Putin’s decision to sign into law requirements for ‘unfriendly’ buyers to pay in roubles for its gas supplies.
This includes German energy giant Uniper, which has bowed to the request and utilised a murky currency conversion system that technically does not breach sanctions.
By contrast, Dutch company GasTerra has refused to comply, while Poland, Bulgaria and Finland have already seen Russian gas flows cut off into their country.
Gazprom Germania is also the parent company of Gazprom Energy, which suffered an exodus of clients amid Western sanctions on the Kremlin despite previously being the biggest business supplier in the UK.
It is now considering a UK rebrand to disassociate itself from Gazprom, with the firm not selling Kremlin-backed energy supplies.
Instead, it resells gas from the National Grid, which comes from multiple providers including the North Sea industry.
Meanwhile, France is in talks with the United Arab Emirates to replace Russian oil purchases following the finalisation of an EU oil ban last week.
Finance Minister Bruno Le Maire told Europe 1 radio: “There are discussions with the United Arab Emirates. We have to find an alternative to Russian oil.”