Germany legalizes the expropriations of energy companies in an emergency situation

In future, the German state will be able to take over energy companies more easily if security of supply is at risk.

Germany legalizes the expropriations of energy companies in an emergency situation

In future, the German state will be able to take over energy companies more easily if security of supply is at risk. The Bundestag, with the abstention of only one party, Alternative for Germany (AfD), has voted in favor of the reform of the Energy Security Law of 1975, which remains only at the expense of the approval of the Federal Council, which is expected on Friday of next week. The reform, designed for situations of supply danger, may have immediate consequences for the PCK refinery in Schwedt an der Oder in Brandenburg, important for the oil supply of East Germany, including the capital Berlin, and which has so far processed mainly Russian oil. PCK is majority owned by Rosneft Germany, a subsidiary of the Russian state-owned company Rosneft.

Due to the embargo on Russian oil imports discussed at EU level, Economy Minister Robert Habeck is looking for alternative sources of oil for Schwedt through Rostock and possibly also through Danzig. But if the company's decisions do not coincide with the government's strategy, the door to expropriation remains open.

Companies in the energy sector are part of the critical infrastructure in Germany. This means that they have a special meaning for everyday life and justify state intervention, as stipulated in the reform. If there is a "concrete danger" that a company will not fulfill its functions or there is a risk that the security of supply will be affected, the reformed law can place it temporarily under state guardianship. In order to guarantee security of supply, the possibility of expropriation of critical infrastructure companies is also created as a last resort.

As spokesperson for the AfD, Rainer Kraft has accused Olaf Scholz's coalition of hasty reform and "neo-communist ideas". The other two opposition parties, the CDU/CSU and the Partido La Izquierda, have provided basic support. On behalf of the CDU, Mark Helfrich pointed out that his party "had a stomach ache at the point of price adjustments in the event of a gas shortage", while, on the left, MP Matthias Birkwald criticized the fact that that state-controlled companies will have to be privatized again once the risk to security of supply has subsided.

The reform establishes that if, in particular, gas imports to Germany are significantly reduced, gas suppliers have the right to adjust their prices, that is, to increase them. The prerequisite is that the second or third level in the gas emergency plan or the national alarm level has been officially determined. The exception rule for these increased prices will expire when the Federal Network Agency formally determines that the shortage situation has ended.

At the moment, the first level of national alarm of the three existing ones is activated in Germany, although Russia's announcement to suspend supply through the Polish Yamal gas pipeline and Moscow's sanctions on three Gazprom Germania subsidiaries tense the outlook again. In Germany there are 47 underground gas storage facilities at 33 locations, operated by some 25 companies. Gas storage compensates for fluctuations in consumption and forms a kind of buffer system for the market. Storage tanks are usually well filled at the beginning of the heating period in the fall, and then levels drop in the spring. On cold winter days, up to 60% of gas consumption in Germany is covered by storage facilities. According to the new law, they must be 90% full by November 1. Last Monday, the storage tanks were at 39% of their capacity.

The transit of Russian gas through Ukraine to Europe has also decreased. According to the Ukrainian network operator OGTSU, the volume of orders for Russian gas transmission was only 53.2 million cubic meters on Thursday. According to the current transit contract, a maximum of 110 million cubic meters of Russian gas can be pumped through Ukraine to Europe every day and the Russian operator reports that the order volume on Tuesday was still 95.8 million cubic meters. On Wednesday, the volume of gas had fallen to 72 million cubic meters and yesterday it fell again by more than a quarter. In recent weeks, however, comparable quantities have been shipped through Ukraine's pipeline system on several occasions. More recently, traffic volume was similarly low on April 24, at just 53 million cubic meters.