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by Dmitry Orlov
German-language media has already been going crazy lately about future purchases of oil and natural gas.
Since Germany is included in the list of “unfriendly countries” by Russia, it, like all the EU states, will only be allowed to purchase Russian natural gas for rubles, and not for euros or US dollars.
And now comes this bit of news, which should make the German talking heads go super-double-crazy: Germany will be left without Russian gas because its contract is not with Gazprom but with its subsidiary Gazprom Germany, which Gazprom has abandoned.
Barely a day or two ago, German officials were loudly declaring that their contract with Gazprom provides for payment in euros or dollars, and therefore Germany will not pay for Russian gas in rubles.
That ought to make everything perfectly clear. However, Germany’s gas supply contract is with Gazprom Germania GmbH, located in Berlin, and not with actual Gazprom, headquartered in St. Petersburg!
Do the German authorities even know that these are now two completely different organizations?
Gazprom Germania GmbH is the headquarters of the diversified conglomerate Gazprom Germania Group, which includes 40 enterprises operating in more than 20 countries in Europe, Asia and North America.
Until Friday, it was a 100% subsidiary of the Russian Gazprom. On Friday, Gazprom pulled out of Gazprom Germania and no longer has anything to do with its former Berlin subsidiary.
With that, Gazprom Germania has lost any connection to Russian gas.
Worse yet, it is believed to be insolvent and likely to go bankrupt within a few weeks, at which point it will be liquidated.
All of its customers will now be forced to buy gas from Gazprom Russia and it pay (indirectly) in… rubles. No rubles—no gas!
Having imposed anti-Russian sanctions as demanded of it by Washington, Germany has already frozen Russian foreign exchange reserves.
The country’s largest gas storage facility in Rehden (Lower Saxony) is only 0.5% full—an all-time low.
Until this Friday, this vault, as well as a number of other facilities located at key points in Germany’s energy infrastructure, indirectly belonged to Russia’s Gazprom—but not any more!
If earlier the German government threatened to nationalize Russian gas assets on its territory, now such threats have become hollow. Germany has nothing more that it can threaten to steal from Russia to force it to keep the gas flowing.
[Instead, Germany’s representatives now have to fly to St. Petersburg and negotiate a new deal with Gazprom directly, in rubles.
Except that they can’t do that either!
According to the Energy Charter and the Third Energy Package of the European Union, every single supplier of energy resources to the EU is required to be part of the EU legal system—perhaps not directly, but definitely through subsidiaries such as Gazprom Germania GmbH.
Thus, all of Gazprom’s contracts with buyers from the European Union were signed by Gazprom Germania GmbH and its other subsidiaries. It could not have been otherwise, for otherwise the contracts would be outside the jurisdiction of the European Union and the Europeans considered this unacceptable.
But now the Europeans will need to come to Russia and sign contracts under Russian law, with payment stipulated in rubles.
Of course, the European Commission will never agree to this… and now we have to wait impatiently to see just how quickly this “never” will come to an end.