Gazprom Germania in Talks on Government Funding Package

(Bloomberg) -- European gas group Gazprom Germania GmbH is in talks to secure a financing package from the government in Berlin that could help stabilize companies seized from Russian control.

Gazprom Germania, which has gas storage units in Germany, is seeking to secure its future, new manager Egbert Laege said in an interview Friday. The group includes London-based trading house Gazprom Marketing & Trading Ltd. and German retailer Wingas GmbH.

“The financing concept that we are working on and that we are discussing is a concept that takes the company way beyond the September timeline,” Laege said. The German government has said previously that it intended to put the group into trusteeship until Sept. 30. “The first target is to stabilize the group,” Laege said.

Gazprom Germania was seized from Moscow’s control in early April after the group’s ownership was transferred from Russia’s state-run Gazprom PJSC to a little-known entity, as the country’s companies came under intense scrutiny following the invasion of Ukraine. The threat of major disruption to Europe’s energy supply chain and potentially even higher gas prices prompted the German government to step in and take control.

The group is now being run under the supervision of energy regulator Bnetza, with Laege, a veteran energy trader and executive, appointed to run operations.

Laege said Gazprom Germania is confident about its legal standing with the European Commission over payments for imports of Russian gas. Moscow has asked European companies to pay into a foreign currency account, known as a ‘K’ account, before the money is transferred into a rubles account by Gazprombank.

Payments Issue

Gazprombank has rejected a payment for some gas deliveries to Europe even though GM&T sought to pay with a rubles account as Russia had asked, Bloomberg reported last week. GM&T and Wingas should expect no more issues but the companies will need to wait and see what happens with the next payment date in May, Laege said.

“Our clear legal opinion -- and that’s as well aligned with the EU Commission -- is that when we pay into this K account in euros we have done the fulfillment, because then the euro amount sits in an account which we have no access to any more and control over what is then happening with it.”

Last week, the group secured a sanctions waiver from the U.S. government, which eased concerns of partners and banks. A rebranding of the group is also planned once lawyers sign off on a few remaining questions, Laege said.

Read More: Gazprom Trading Unit Says It Won’t Return to Russian Control

“Our first quarter results are really very outstanding,” Laege said, adding that talks were progressing well with banks about easing burdens on its trading operations. “We’re talking about a very healthy, sustainable and successful business.”

Filling the Rehden storage facility in northern Germany before the next heating season is among top priorities, and the process has started.

“This is a huge storage, and a huge amount of gas is needed which is quite costly,” he said. “So we need at least working capital to put the gas in.” Various options for accelerating the process are being discussed, and Bnetza is looking into this, he added.

As for the German government’s broader emergency plan to maintain gas supply, Laege said that if Russia threatens to escalate the fuel conflict with Europe, he had faith that those contingency arrangements were strong.

“I’m very confident in that,” he said.

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