Russia slaps sanctions on Gazprom's German unit, Yamal-Europe owner
Russia has imposed sanctions on the former German subsidiary of its state gas supplier Gazprom and the operator of the Polish section of the Yamal-Europe pipeline, its government announced May 11, prompting a spike in gas prices
The sanctions, which were applied to 31 companies in the EU as well as in the US and Singapore, are prevented from conducting business with Russian entities. They include Gazprom Germania and 29 of its subsidiaries based in Switzerland, Hungary, Britain, France, Bulgaria, the Benelux region, the US, Switzerland, Romania and Singapore. Many of these subsidies sell Russian gas in Europe, as well as operating pipeline transmission and storage assets.
German regulators seized control of the operations of Gazprom Germania in early April. Days earlier Gazprom reported that it had terminated its participation in the business, without disclosing who the new owner was.
Another of the sanctioned companies was EuRoPol GAZ, a joint venture between Gazprom and Polish gas supplier PGNiG that owns the part of Yamal-Europe that runs through Poland. Russia halted gas supply to Poland on April 27 after Warsaw refused to have its payments for gas converted into rubles under a Kremlin decree. However, Yamal-Europe is also used to send Russian gas to Germany.
The TTF June contract for gas supply soared 15% to €115 ($120)/MWh by 13:00 GMT on Russia's announcement, amid fears that the move could make gas supply contracts null and void.
"The chances of this happening are slim, but not zero and will hasten Europe's scramble to arrange for additional LNG, speed up plans for a buyer's alliance and potentially consider demand side measures such as gas rationing," Rystad Energy analyst Kaushal Ramesh commented. "There is historical precedent for Gazprom stopping gas flows as they did several times between 2005-2014 and the ongoing tensions between the Gas TSO of Ukraine and Gazprom are setting the scene for a repeat."
The upside is that European gas storage levels are sufficient to last through most of 2022 even Russian supply is halted barring any unexpected weather events, Ramesh said, "but the outlook for winter 2022 supply is now a lot more pessimistic."