“May raise the stakes in the game.” Why Russia imposed sanctions against subsidiaries of Gazprom

The companies that have been sanctioned are located in the US, UK and European countries, including Bulgaria, Romania and Poland. The government decree states that Russian companies are prohibited from entering into transactions with sanctioned companies, as well as making payments and transactions with securities with or in their favor. In addition, ships owned by companies or persons subject to restrictions are prohibited from entering Russian ports. The Ministry of Finance is responsible for amending the list.

In particular, after Russia imposed sanctions against subsidiaries of Gazprom, the companies are now forbidden use the Yamal-Europe pipeline for gas transit, since part of it belongs to the sanctioned EuRoPol GAZ. EuRoPol GAZ is a joint venture between Gazprom and the Polish PGNiG, which owns the Polish section of the Yamal-Europe gas pipeline.

“Deal with it yourself, it’s your headache”

Marcel Salikhov, head of the economic department at the Institute of Energy and Finance, told RTVI that the inclusion of Gazprom’s subsidiaries on the sanctions list would not have a “significant impact” on the European gas market, so such a decision was “expected”.

The analyst suggests that these companies came under sanctions after the “daughter” of “Gazprom”, Gazprom Germania, was actually in early April nationalized in Germany, the company was transferred to the control of the Federal Network Agency (BNA).

Gazprom Germania GmbH was a subsidiary of Gazprom Export (part of Gazprom). The company sells fuel and has a network of gas filling stations in Germany. At the same time, Gazprom Germania owns Gazprom Marketing & Trading.

“Gazprom Marketing & Trading is a real-life company engaged in gas supplies and trading. They bought gas and entered into contracts with Gazprom Export, a subsidiary of Gazprom, which sells gas for export,” the expert explained.

We do not know what the terms of the contracts are, it is not publicly known, but it can be assumed that the terms were quite attractive, that is, more attractive than the terms of supply for other suppliers.

According to Salikhov, after the companies were nationalized, Gazprom decided to take away from its subsidiaries those preferences that they received while under the control of the Russian company.

“Now, in fact, these companies have been nationalized, and an attractive contract continues to operate. From Gazprom’s point of view: why? Our company was taken away, and we still have to supply gas under good conditions. This is illogical in terms of confrontation. In general, the logic is this: “you took our company, we can’t work with it, now deal with it yourself, this is your headache,” the analyst said.

Companies will not be able to fulfill contracts

Thus, sanctions give a formal right not to fulfill previously concluded contracts.

“These companies [которые попали под санкции] – separate legal entities, there are contracts between them. “Gazprom Export” cannot say: “and now we are not fulfilling the terms of this agreement!” But on what basis [можно отказаться выполнять контракты]? Therefore, these Russian counter-sanctions provide formal grounds for not fulfilling the conditions for the supply and saying: look, we have national legislation, we have force majeure, we cannot supply gas under the contract, because Russian legislation prohibits this, ”said Salikhov. .

At the same time, according to the expert, there will be no serious consequences for the decision to impose sanctions on companies, although “someone will suffer one way or another – several billion cubic meters of gas [эти дочерние компании] supplied in Europe. However, other companies [которые не попали под санкции]formally they can apply to Gazprom and buy gas,” Salikhov noted.

“Russia raises the stakes in the game”

Stanislav Mitrakhovich, a leading expert of the National Energy Security Fund and the Financial University under the Government of Russia, also believes that the inclusion of Gazprom’s subsidiaries in the sanctions list was a response to their actual nationalization.

Apparently, Gazprom does not want to supply gas to these companies in response to sanctions from the West. Gazprom would, perhaps, even supply gas, but formally it does not have such an opportunity, because the Russian government has introduced these restrictive measures, the analyst emphasized.

“I think that Russia is thereby raising the stakes in the game – creating a certain gas shortage in Europe, trying to push the European side towards Russia, in particular, to transfer payments to a new scheme with two accounts [в конце марта президент России Владимир Путин подписал указ, согласно которым “недружественные страны” должны платить за газ в рублях], as well as increase gas injection through existing pipelines. An increase in the stakes in the game is also Russia’s refusal to use the Yamal-Europe gas pipeline, ”the expert noted.

He suggested that this was such a forwarding to the future – months ahead, a year ahead. “You, Europeans, remember that there is also Nord Stream 2, you can also turn it on if you wish. [Германия приостановила сертификацию трубопровода после того, как Россия признала ДНР и ЛНР]. I don’t think that in the current political situation it makes sense to talk about this as some kind of nearby event, but on the horizon of some months, years ahead, this is such a hint to Europe: “remember that there is still this channel” [“Северный поток — 2”]. This is a logical continuation of the confrontation and a move that shows that Russia can also raise the stakes in the game,” Mitrahovich said.

Slava Kutepov

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