BERLIN (BLOOMBERG) - The German government is weighing options for a unit of Russian gas giant Gazprom shunned by clients in response to the war in Ukraine, according to people familiar with the matter.
Options being analysed include restructuring Wingas, which accounts for about 20 per cent of the German gas market, or finding a new energy provider for its clients, said the people. Berlin officials are currently studying what impact the possible failure of Wingas would have on the economy, and no final decision has been made.
Gazprom subsidiaries in Europe are coming under pressure as clients and business partners refuse to do business with them, raising the prospect that some of them will not survive.
Germany is considering nationalising or even expropriating the German subsidiaries of Gazprom and Rosneft, the Handelsblatt newspaper reported on Thursday (March 31), citing sources in the government. Gazprom Germania operates gas storage facilities, while Rosneft Deutschland accounts for 25 per cent of the German refinery business, according to the report.
Some banks are delaying transactions for Wingas and clients do not want to sign new contracts with the company, the people said, although previously signed deals are still in place. Wingas did not respond to calls and e-mails seeking comment.
Helping Wingas will not be an easy task because the businesses of the Gazprom group's many companies are so intertwined. For instance, it is the London-based trading arm, Gazprom Marketing & Trading, that holds Wingas' hedges, or the energy previously purchased to supply clients. Without those, customers could be left to pay the current high spot prices.
That is the same problem Britain faces. It has made plans to nationalise Gazprom Energy, a unit that supplies gas and electricity to about a fifth of the British market and has clients including parts of the National Health Service. But the government soon figured out that hedges worth £3.5 billion (S$6.2 billion) were held by the trading arm.
For the German market, the problem could be even bigger. Wingas' hedges are about four times bigger than those of Gazprom Energy, according to one person, and energy regulators in both countries have already held talks.
Gazprom Marketing & Trading, which has more than 300 employees, is also coming under pressure. Just a few large European energy companies are still doing deals with it and the firm is even being kicked out of its London offices by landlord British Land. Its failure could spark a domino effect that takes down other subsidiaries, from those in Britain to Germany and Singapore.
Wingas is part of Gazprom Germania, which also owns about 25 per cent of Germany's gas storage capacity. The offices of both companies were raided by European Union officials this week as part of an antitrust probe into whether Gazprom had a role to play in Europe's worst energy crunch since the 1970s, which has sent prices breaking several records since last summer.
