Germany approved the “energy security law”. Expropriations are easier. New pricing and storage rules

The German Parliament yesterday approved the new law for the energy security. The pre-existing discipline, of 1975, had served to calm the consequences of the shock of rising oil prices with temporary speed limits and traffic bans. The new one now comes against the backdrop of uncertainties about supplies from Russia.

How important it is has already shown the story of Gazprom Germany GmbH, which also owns the company Astora GmbH which operates the largest German methane storage facilities in Rehden, Lower Saxony. The Vice-Chancellor Robert Habeck (Verdi), thanks to the discovery of a formal error, was able to prevent the transfer of ownership and on March 31 the Russian parent company separated from it to cause insolvency, at which Habeck placed Gazprom Germany GmbH under the fiduciary control of the Federal Network Agency (Bundesnetzagentur) until 30 September. The Kremlin’s response was to place the company on May 12 on a list of 31 sanctioned companies, depriving Germany of a supply of 10 million cubic meters of gas per day; about 3% of the gas that Berlin buys each year from Moscow.

Fiduciary control and expropriation. The new energy security law aims to allow the government to be more prepared. For example in the event of imminent danger to the supply: if the supplier companies do not perform their duties in the interest of the community, in the future they may always be subjected to fiduciary control for six months, which can be extended for another six, by order of the Ministry of Economy. If it is not sufficient to guarantee the safety of supplies, it will be admissible, as a last resort ratiome too’expropriation. The FDP has obtained, however, that with respect to the original bill, the nationalization must be followed by reprivatization.

New rules for trade, prices and warehousing. To be equipped for an embargo or block of supplies, the law provides for the establishment of a digital platform to which large industrial producers and gas distributors must register. If necessary, you can then decide where to save gas and where to apply cuts. To this end, the gas safety regulation will have to be amended. To prevent suppliers from becoming insolvent in the event of gas shortages and avoiding cascading bankruptcies, they will be eligible immediate price changes up to the final customers. Changes are also identified in the economic law for energy: the closure of a gas storage plant will have to be notified first at Bundesnetzagentur and approved by this. This is to prevent reserves from being closed without the government’s knowledge.

Benefits for consumers. In the face of possible increases in the case of shortages of raw materials, consumers have greater security in supplies. Distributors will no longer be able to terminate contracts without first obtaining clearance from the Federal Network Agency. In the event of bankruptcy, the trustee will then be required to honor the contract. Where, in case of need, gas can be saved is governed by the three-stage emergency plan which gives priority to private accommodation. First the industrial pavilions remain cold and only at the end the apartments. Which industries then take precedence over supplies is decided by Bundesnetzagentur. The Ministry of the Economy will be able to intervene in case of need with additional regulations to limit the degree-day in the houses.

The critical points. The business world views the possibility of expropriation with suspicion: the Union of German Chambers of Commerce and Industry (DIHK) notes that there should only be in extreme cases and with parliamentary control. The Association of Energy Distribution Companies, on the other hand, asks that, in the face of the measures, companies with a German ownership majority can access financial aid andreticulates the multiplicity of commercial contracts: immediate increases in prices for consumers would cause a flood of cancellations and subsequent insolvencies.

Lex Rosneft. The new law could find its first application in the case of the refinery PCK in Schwedt an der Oder in Brandenburg. Mostly it belongs to the Russian group Rosneft which supplies it through an oil pipeline from Russia. Germany wants to give up Moscow’s oil and has prepared alternative plans, but it is necessary that Rosneft agree to sell its shares (there is talk of a possible greater investment of the Shellbut also theEni holds 10%) or is in fact required by law. This is why the new law has already been renamed Lex Rosneft. The text has yet to be approved by the second branch of parliament, the Bundesrat. Ratification is expected to take place next week.

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