LONDON (Reuters) – Moscow has imposed sanctions on the owner of the Polish part of the Yamal pipeline that takes Russian gas to Europe, as well as the former German unit of Russian gas producer Gazprom, whose subsidiaries serve gas consumption in Europe. .
Entities included in the list of companies affected by the Russian government website On Wednesday, it was largely centered on countries that imposed sanctions on Russia in response to its invasion of Ukraine, most of which are members of the European Union.
The implications for gas supplies to Europe, which buys more than a third of its gas from Russia, were not immediately clear. Data from the Gascad pipeline operator showed that eastward-bound gas continued to flow through the Yamal-Europe pipeline from Germany to Poland.
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Energy prices rose on Wednesday as the European Union considers a possible ban on Russian crude, while trading companies prepare to reduce their activity with Russia when stricter European Union rules on Russian oil sales come into effect on May 15.
Russian President Vladimir Putin decreed on May 3 that no Russian entity would be allowed to do deals with those on the sanctions list, or even fulfill its obligations under existing deals. Read more
The decree expressly prohibits the export of products and raw materials to listed persons and entities.
These consist of EuRoPol Gaz, Gazprom Germania and 29 subsidiaries of Gazprom Germania in Switzerland, Hungary, Britain, France, Bulgaria, the Benelux region, the United States, Switzerland, Romania and Singapore, the Interfax news agency said.
Gazprom supplies much of its gas to Europe via the Yamal-Europe pipeline, and its various activities across Europe and beyond are essential to the European gas market and supply it to industry and households.
Germania’s operations, based on Russian gas production, cover the entire gas value chain from pipeline transportation to storage and supplies to wholesalers and retailers.
Gazprom gave up ownership of the company last month without explanation, forcing Germany’s power grid regulator to take control of operations there. Read more
These operations include Germany’s largest gas storage facility at Rehden in Lower Saxony, with a capacity of 4 billion cubic metres.
The German Economy Ministry said it was studying the Russian announcement on Gazprom Germany but still lacked details. The ministry said that gas supplies are currently guaranteed and are constantly being checked. Read more
“The German government and the Federal Network Agency, as trustees of Gazprom Germania, are in the process of taking the necessary precautions and preparing for different scenarios,” the spokesman said in a statement.
Putin framed his decree as a response to what he called the illegal actions of the United States and its allies aimed at depriving “the Russian Federation, citizens of the Russian Federation and Russian legal entities” of property rights or restricting their property rights.
The United States and its allies have imposed the toughest sanctions in modern history on Russia and its business elite in Moscow, moves that Putin has described as a declaration of economic war.
“The intent is clear — just to reciprocate the actions taken by Western Europe and to control revenue and gas flows,” said Ramanan Krishnamurti, chief energy officer at the University of Houston.
Putin, 69, has repeatedly warned that Moscow will reciprocate, even though the Kremlin’s toughest economic response until last week was to cut gas supplies to Poland and Bulgaria and demand a new payment plan for European gas buyers.
Jazz System, operator of the Polish section of the Yamal-Europe pipeline, could not immediately be reached for comment.
EuRoPol Gaz, jointly owned by Gazprom and the largest Polish gas company, PGNiG, (PGN.WA), and earns transit fees for Russian gas transiting Poland. PGNiG had no immediate comment.
Wingas, a subsidiary of Gazprom Germania and one of Germany’s largest gas dealers, said after the acquisition by the German regulator that it would continue to operate under the changing parameters.
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Reporting by Reuters. Written by Kevin Levy. Editing by Alex Richardson, Grant McCall and Richard Boleyn
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