Germany Nationalizes Former Gazprom Subsidiary... Response to Suspension of Russian Gas Supply

Acquisition of Sepe Facing Management Difficulties Due to Russia's Gas Supply Cutoff
German Government Also Negotiating Nationalization of Leipziger VNG

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kim Sung-wook] The German government is nationalizing the former German subsidiary of Gazprom, Russia's state-owned gas company. Previously, Gazprom had halted gas supplies through Nord Stream 1, the natural gas pipeline connecting Germany and Russia.

On the 15th (local time), the German Federal Ministry for Economic Affairs and Climate Action announced that it would acquire 100% of the shares of Sefe, Gazprom's former subsidiary in Germany, to ensure stable gas supply within Germany. The German Federal Network Agency has been managing Sefe in trust since April. Authorities first implemented a capital reduction to bring the company's capital, owned by Gazprom, back to zero, then increased the capital by 220.56 million euros (approximately 300 billion KRW). The European Union (EU) Commission approved the German government's nationalization of Sefe last weekend. The funds for acquiring Sefe will be provided through a 200 billion euro (approximately 280 trillion KRW) support fund that the German government prepared to respond to the energy crisis.

The German government stated that the acquisition was completed to prevent the risk of Sefe's bankruptcy and to ensure normal business operations. A Ministry of Economic Affairs and Climate Action official explained, "Sefe was at risk of bankruptcy due to excess liabilities on its balance sheet, which could jeopardize the stability of gas supply in Germany, leading to the decision to nationalize. The capital reduction is linked to loss compensation, and the scale of the loss is tied to the market value of Sefe's shares."

Since Russia's invasion of Ukraine, it has gradually reduced natural gas supplies to Europe in retaliation for sanctions against itself. Sefe's operational crisis is also due to Russia effectively halting gas supplies to Germany. Gas companies like Sefe had to quickly purchase alternative supplies to replace Russian gas, resulting in losses amounting to billions of euros. Recently, banks and companies have reportedly been reluctant to do business with Sefe.

Previously, the German government decided to nationalize Uniper, the country's largest gas company. In September, Uniper announced that "the German government is pursuing final negotiations to acquire shares from the parent company Fortum" and that "the government proposed a new bailout package including a capital increase of 8 billion euros (approximately 11 trillion KRW)." The funds the German government is injecting into Uniper amount to 29 billion euros (approximately 40 trillion KRW).

As the energy crisis intensifies across Europe, Germany has been pushing forward with nationalization efforts for major gas companies. It is also reported that negotiations are underway regarding the nationalization of another gas company, Leipzig-based VNG.

This content was produced with the assistance of AI translation services.