Russia’s alarming hold over German energy infrastructure

The war in Ukraine has exposed not only Germany's dependence on Russian gas, but also the large share of Russian capital in the country's oil refineries, pipelines and other gas infrastructure.

Russia's alarming hold over German energy infrastructure
The facilities at the gas receiving station for the Nord Stream 2 Baltic Sea pipeline. Photo: picture alliance/dpa | Stefan Sauer

The German subsidiaries of Russian giants Gazprom and Rosneft are key players in the energy landscape of Europe’s biggest economy.

Energy deals with Russia were long seen as part of a German policy of keeping the peace through cooperation with Russian President Vladimir Putin’s regime, but that approach now lies in “ruins”, according to Der Spiegel magazine.

German politicians now “have to face the fact that they have not brought on board agents of change within Russia, but possibly also Trojan horses of the  Kremlin”, the magazine said.

READ ALSO: ANALYSIS: How quickly can Germany wean itself off Russian gas?

Gas storage

In early April, the German government took the unprecedented step of temporarily taking control of Gazprom’s German subsidiary, after an opaque transfer of ownership of the company sent alarm bells ringing in Berlin.

Economy Minister Robert Habeck justified the radical move by saying it served “public order and national security”.

Gazprom’s Rehden gas storage facility in Lower Saxony state alone accounts for around 20 percent of Germany’s total gas storage capacity.

The Rehden facility was owned by the German group BASF until 2015, when it was sold to Astora, a subsidiary of Gazprom.

It has a capacity of four billion cubic metres and bills itself as the largest gas storage facility in Europe. However, its tanks are currently only 0.5 percent full, with Gazprom suspected of having deliberately kept levels low ahead of Russia’s invasion of Ukraine.

READ ALSO: Germany slashes Russian energy imports

Astora has additional storage facilities in Jemgum, on the border with the Netherlands, and in Haidach, Austria. Gazprom Germania also has a stake in a large salt cavern storage facility near Hamburg.

Distribution networks

Gascade, one of the largest gas distribution network operators in Germany, is 50.03-percent owned by Gazprom Germania.

The company describes its network of 3,200 kilometres (2,000 miles) of pipelines delivering gas to cities across the whole of Germany as “the hub of European natural gas transport”.

On its website, Gascade says its “transport business is not subject to the influence of the Gazprom Group or any other shareholder”.

Other important pieces of the puzzle, such as the North European NEL pipeline and the Baltic Sea OPAL pipeline, are owned by the company Wiga Transport, which in turn is 49.98-percent owned by Gazprom Germania.

The remaining stakes in Gascade and Wiga Transport are held by the German Wintershall Dea Group – which is one-third owned by Russian oligarch Mikhail Fridman, a target of recent Western sanctions.

Wingas, another company wholly owned by Gazprom Germania, also has a market share of around 20 percent and plays a crucial role in the distribution of gas to German municipal utilities, industrial companies and power plants.

Gazprom Germania is due to stay under state control until September 30, by which time the government must decide between nationalisation or sale to a new owner.

Oil refineries

The German subsidiary of Rosneft claims to account for a quarter of all German crude oil imports and has a majority stake the PCK refinery in Schwedt, northeast of Berlin.

The PCK refinery can process about 11.6 million tonnes of crude oil per year, which amounts to about 11 percent of Germany’s total oil consumption.

In late 2021, Rosneft announced plans to increase its stake in the PCK refinery from 54 to 92 percent by buying shares from Dutch-Anglo group Shell.

Germany’s Federal Cartel Office approved the transaction a few days before the outbreak of the war but the Economy Ministry is examining whether it can still be stopped.

READ ALSO: EXPLAINED: How Germany could end its dependence on Russian energy

Rosneft Germany also holds 24 and almost 29 percent stakes in the two large Miro and Bayernoil refineries in southern Germany.

Like Gazprom for the gas sector, Rosneft is a major distributor in the oil sector, supplying 4,000 major customers in Germany, according to the Handelsblatt daily.

By Sophie Makris

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Russia using energy ‘as weapon’, says Berlin

German Economy Minister Robert Habeck accused Russia on Thursday of using energy as "a weapon", after Moscow announced sanctions on Western energy firms and a key pipeline again saw lower gas deliveries to Europe.

Russia using energy 'as weapon', says Berlin

“It has to be said that the situation is coming to a head, in such a way that the use of energy as a weapon is now being realised in several areas,” Habeck told a press conference.

Ukrainian Foreign Minister Dmytro Kuleba, on a visit to the German capital, said Moscow had shown itself to be an unreliable supplier.

Kuleba urged Europe to end its heavy dependence on Russian gas that was helping to finance Moscow’s war machine.

“This energy oxygen for Russia must be turned off and that is especially important for Europe,” Kuleba said at a joint press conference with Habeck.

“Europe must get rid of this complete dependence on Russian gas, since Russia has shown… that it is not a reliable partner and Europe cannot afford that.”

Russia on Thursday said it would stop sending natural gas via the Polish section of the Yamal-Europe pipeline as part of retaliation for Western sanctions over its invasion of Ukraine.

The move comes a day after Russia issued a government decree imposing sanctions on 31 EU, US and Singaporean energy firms.

Most of the companies belong to the Gazprom Germania group of subsidiaries of Russian energy giant Gazprom.

The sanctions include a ban on transactions and the entry into Russian ports of vessels linked to the affected companies.

Meanwhile, operators on Thursday reported a drop in gas supplies from Russia via Ukraine for a second day, after Kyiv said it would suspend flows through a key eastern transit pipeline called Sokhranivka because the area wasno longer under Ukrainian control.

But Gazprom has denied there was a case for the Ukrainian side to declare “force majeure” and said it was impossible to reroute all the supplies through another Ukrainian pipeline.

‘Blackmail’ fears

Gazprom told the Interfax news agency that supplies transiting Ukraine on Thursday were at 50.6 million cubic metres in total, compared to 72 million cubic metres the day before.

Germany, which is hugely reliant on Russian energy, said it had been able to make up the shortfall through gas imports from Norway and the Netherlands.

The head of Germany’s Federal Network Agency, Klaus Mueller, also noted that Russia had been very “surgical” about its pick on which companies to sanction, selecting only storage and trading companies, and “not the operators”.

This “very well-planned, precise decree allows it to keep doing business with Germany, but not on old contract conditions”, rather under new conditions that other gas dealers would then have to conclude with Russia, said Mueller.

Europe’s biggest economy is racing to wean itself off Russian energy and has already almost completely phased out Russian coal.

But ditching Russian oil and gas will be more difficult.

With fears growing that Russia could abruptly turn off the energy taps, Habeck said Germany was focusing on building up gas reserves to prepare for winter.

“The gas storage facilities must be full by winter or else we will be in a situation where we can easily be blackmailed,” he warned.

READ ALSO: Russian gas transit halt in Ukraine hits key pipeline’s inflow in Germany