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Coalition MPs back Gazprom stake in EON

The Local · 7 Jun 2011, 10:46

Published: 07 Jun 2011 10:46 GMT+02:00

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In the wake of Chancellor Angela Merkel’s decision to phase out nuclear power by 2022, leading members of the pro-business Free Democratic Party (FDP) and Merkel’s own conservatives say such an investment would make economic sense for Germany.

“Without atomic energy, Germany in future has an even greater interest than before in gas supplies from Russia,” FDP economics spokesman Martin Lindner told business daily Handelsblatt.

The most likely form of any investment would be Gazprom to buy part of EON’s subsidiary Ruhrgas. This would stabilize the important German-Russian co-operation and safeguard affordable electricity prices for all of German industry, Linder said.

There would, he added, have to be a limit to any acquisitions by Gazprom.

“The boundaries of a takeover by Gazprom will however be the point where the largest German energy provider could lose its independence,” Lindner said.

Gazprom boss Alexei Miller has previously shown an interest in some of EON’s operations that EON itself wants to part with. Miller said that in particular he would look at a takeover of the subsidiary Ruhrgas, though he has said there are no actual offers currently on the table.

Joachim Pfeiffer, economy spokesman for the conservative Christian Democratic Union and its Bavarian sister party the Christian Social Union, also spoke out in favour of allowing such a takeover.

“Kneejerk rejection of an entry by Gazprom through EON is irrational,” he told Handelsblatt.

Gazprom has for years operated a successful joint venture with German chemicals firm BASF, called Wingas.

“Should Gazprom grow larger in the energy sector, that could also profit the German economy. With the accelerated exit from nuclear power, gas can and will have to play a greater role in the guarantee of a stable supply security for the German economy,” Pfeiffer said.

Earlier this week, Merkel’s cabinet approved the planned phase out of nuclear power by 2022 at the latest, in response to the disaster at Japan’s Fukushima plant following the earthquake and tsunami there.

A source in the federal Economy Ministry said the legal status of a multi-billion euro takeover of any part of EON by Gazprom would be looked at carefully.

“Should the intentions of Gazprom firm up, the (competition watchdog) the Bundeskartellamt and the ministry would very closely examine the legal competition side,” the source said.

The remarks came as the energy firm RWE stepped up the pressure on Merkel over the quick nuclear exit. CEO Jürgen Großmann sent a letter on Sunday to Merkel protesting against the phaseout and criticising her policy on several fronts, according to Tuesday’s Financial Times Deutschland.

Story continues below…

Given industry’s opposition to the quick nuclear exit, the pro-business FDP is battling to represent the views of its natural constituency. The party’s general secretary, Christian Lindner distanced himself on Tuesday from the plan to exit by 2022 and warned their conservative coalition partners about possible compensation claims by the energy companies.

The coalition was “not pure FDP policy,” he told the daily Kölner Stadt-Anzeiger.

“There is whole range of non-market instruments that we have to accept here for reasons of the coalition,” he said.

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Your comments about this article

12:00 June 7, 2011 by twisted
While I certainly would be like to be totally wrong on this point, it is my humble opinion that the Russians (Putin and his ilk) cannot be trusted and to be dependent on them for gas is a mistake. The use gas as a political tool. Done in the past and no doubt, will be done again in the future. Do not place the country in a position where it can be blackmailed by Russia.
14:17 June 7, 2011 by nemo999
Go Ahead invite the Bear into the Tent.
14:59 June 7, 2011 by RedLeg6
Trading off nuclear energy for gas dependence on Russia. Wow, I hope someone comes to their senses before 2022.
18:03 June 7, 2011 by harcourt
Dependence on Russian gas is VERY risky considering the chances are that Putin could well be President from 2012 till 2020. This is precisely the run-up period before Germany ditches nuclear power. You could say that Germany would be at the mercy of Putins grandiose schemes for making Russia a major industrial power in the post-communist period.
19:56 June 7, 2011 by jg.
It seems fairly sensible to limit the extent of any investment in German utilities by Gazprom. However, it would be the height of hypocrisy for Germany (or other WTO members) to block Russian investment while they are simultaneously demanding (successfully) increasing access to Russia's markets and shares in assorted sections of the Russian economy.

About energy and politics: Unlike some, Russia has not invaded any countries over energy. It's Russia's own gas to sell as they see fit and it seems perfectly reasonable that they would wish to get the best possible price. It also seems reasonable that the Russian government wants the finite resources of Russia to be used to benefit the country as a whole, not just a few tax-dodging oligarchs and a handful of foreign firms.

Russia never turned off the gas supply to Germany or any other western European countries. They turned off the supply to Ukraine after that country repeatedly failed to pay for the gas they were using at the agreed price. Ukraine then decided to steal from the supplies being piped via their country to western Europe. The Ukranian position seemed to be that they should continue to receive gas at the subsidised rates they used to enjoy as part of the Soviet Union - whilst simultaneously being openly hostile to Russia and to the half of their own population that speak Russian. The US position in this period seems quite schizophrenic: on one hand, their representative in the WTO was telling Putin that he should not subsidise gas prices for Russian pensioners - on the other hand, the US government seemd to think that Russia should continue to supply subsidised gas to an unfriendly Ukraine.

The Nord Stream pipeline will avoid such problems in future - which is probably why Ukraine, Poland and Estonia all complained about a project that will allow Germany and other western European countries to receive gas direct from Russia.

The southern Nabucco pipeline will provide an alternative gas supply to western Europe but the bulk of supplies will likely come from Russia and Kazakhstan, via Gazprom.

Nuclear power: it is complete madness to shut down German nuclear power stations in a knee-jerk reaction to the situation in Japan. Germany will end up buying electricity from adjacent countries which will likely have been generated in nuclear power stations.
21:30 June 7, 2011 by harcourt
Whilst I agree whole heartedly with jgs last paragraph what comes before seems like an advert. for Gazprom written by Gerhard Schröder !!
12:11 June 8, 2011 by delvek
@ jg +1 on your last paragraph!

Also, in fear of the Japan situation Germans feel compelled to shut down their nuclear power plants, well what about those in France, does anyone know which way the wind blows? There are 2 active power plants on the German border.
12:23 June 8, 2011 by jg.
"Whilst I agree whole heartedly with jgs last paragraph what comes before seems like an advert. for Gazprom written by Gerhard Schröder !!"

So, which part(s) of my post do you consider to be inaccurate?

I see a lot of anti-Russian rhetoric in other comments but nobody seems prepared to look at the facts, their opinions seem to come straight from the Cold War and a hatred of Russians.
15:00 June 8, 2011 by harcourt
jg: What's your problem, did I say anywhere that there were any inaccuracies?( this worry, sounds very Germanic) How do you know that I didn't accept all your statistics as correct. I just said it sounded like an advert. Or are you one of these people who think ALL adverts are a pack of lies.
17:00 June 8, 2011 by jg.

My problem is really with the first four Russophobic comments. Your post seemed to imply that mine was mere corporate propaganda and could therefore be treated as trivia.

"...are you one of these people who think ALL adverts are a pack of lies?"

Companies are typically quite selective with the truth when advertising their wares, so I tend not to take advertising at face value.
20:02 June 8, 2011 by harcourt
Fair enough jg I accept your points. My comments were not I hope Russophobic but have grave reservations about Putin. The man is quite complex as you may have noticed in the way he likes to portray his public image. So if he were to be President from 2012- 2020 I feel he would use any means available to further his aims, which appear to favour returning to an empire such as was under Peter the Great. So I really do think it is crazy for a heavily industrial country like Germany to depend on neighbouring countries for the bulk of its energy needs.
20:13 June 10, 2011 by neunElf
Russia, is a kleptocracy, run by and for Putin and the former KGB elite who now rule the nation, substituting their own self interest for the rule of law!

Ask the over 250 journalists murdered in Russia, 98% of which remain unsolved, whether it would be wise to trust Vlad Putin for Germany's energy security!
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