The German government announced on Tuesday that it will nationalise SEFE, a former subsidiary of the Russian energy giant Gazprom, to safeguard its energy needs as it moves away from dependency on Russian energy.
The German Federal Ministry for Economic Affairs and Climate Action will increase the German development bank’s financing to the firm from $12.2bn to $14.3bn.
SEFE holds a 14% stake in the German gas supply market and operates in other EU member states. Additionally, the company owns and serves 28% of gas storage, supplying the German market and gas pipelines in Germany and other EU countries.
Margrethe Vestager, EC executive vice president of competition policy, said: “Gazprom’s disruption of gas deliveries is showing Russia’s unreliability as a supplier. Many importers of Russian natural gas, with fixed delivery contracts, concluded with customers before the crisis, are currently not being served.
“Any disorderly failure to fulfil these fixed contracts can have severe consequences for customers and the German economy. So, we welcome the change of ownership of SEFE, which will enable Germany to search for new gas suppliers while ensuring the security of supply.”
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Gazprom’s existing registered capital of $234.7m will be reduced to zero under the proposed measure, effectively ending the Russian shareholder’s ownership. As a result, the action will not affect SEFE’s equity, as the German Government will subscribe to the new shares.
According to the EC, SEFE has suffered significant losses due to Russia’s invasion of Ukraine and the following suspension of gas supply by Gazprom. Formerly known as Gazprom Germania, SEFE was placed under German trusteeship since Gazprom cut off the unit in April.
SEFE has equity capital of $1.07bn but net losses of $2.15bn, according to its October earnings report. Bloomberg News reported that the situation has not improved since then.
Due to the intended transfer of shares and liquidation by its Russian shareholder on 4 April 2022, SEFE was put under the trusteeship of the Federal Republic of Germany to continue doing business and maintain supply security. The company remains under Germany’s control, with the trusteeship continuing until 15 December 2022.