The Gazprom unit that was seized by the German government in April and given a €10bn taxpayer bailout will continue to pay bonuses to its gas traders, its new managing director has said.
Egbert Laege told the Financial Times that Securing Energy for Europe, previously known as Gazprom Germania, was “back in town, ready to resume our business” after receiving the loan from German state development bank KfW.
Berlin seized control of Gazprom Germania and its subsidiaries in early April, several weeks after Russia invaded Ukraine, placing them under the trusteeship of the country’s federal energy regulator, the BNA.
Sefe owns a number of gas storage facilities in Germany including the country’s largest, Rehden, as well as the Wingas distribution company that supplies big industrial consumers, and UK trading division Gazprom Marketing & Trading, which is also set to be rebranded.
Russia struck back in May by cutting the volume of gas it supplies to the company, forcing it to buy in the spot market instead, often at higher prices, and plunging GG into a financial crisis.
The German government this month stepped in with its loan to save the company from insolvency and extended the BNA’s trusteeship beyond its previous cut-off point of September this year.
Laege said the loan had provided Sefe with much-needed liquidity and was helping it pay for the more expensive gas it was procuring.
He said his immediate goal as the head of Sefe was to secure the critical infrastructure under the company’s control to “ensure security of supply” for Germany, as well as to stabilise the company’s finances.
He added that the company had good long-term prospects based on the “unique capabilities” of its staff, particularly their experience of trading and portfolio management, and its control of infrastructure that could become the “backbone of a transformed energy system”.
Gazprom has been accused of contributing to a squeeze on Europe’s gas supplies even before the invasion of Ukraine, after the company left the Gazprom Germania storage facilities in Germany and Austria practically empty ahead of last winter.
Laege said thanks to the KfW loan, GM&T “will now be able to start trading again”. He said many of its counterparties were “coming back to . . . us” and new ones were also appearing. “We take this as an encouraging sign that business is picking up,” he said. “We’re back on the GM&T side and back on the retail side, both in the UK and Germany,” he said.
London-based GM&T is a big trader of gas, liquefied natural gas and power, buying from sources including Norway and the North Sea and selling worldwide.
The average salary at GM&T was £127,000 a year in 2020, according to accounts filed in the UK, including administrative staff. Top traders at the company can at times receive millions of pounds in bonuses, according to one person close to the company.
Laege said there were no plans to change the existing pay structure. The company declined to comment on the size of trader bonuses.
GM&T’s subsidiary Gazprom Energy is the biggest supplier of gas to business in the UK, providing more than a fifth of that used by British companies, making it a crucial part of the country’s energy system.
Gazprom Energy, which has 30,000 corporate customers, came under pressure in recent months as companies such as Siemens and McDonald’s said they would try to withdraw from their contracts, and NHS trusts and local authorities were encouraged to find new suppliers.
The UK government had been on standby to put the company into “special administration”, a de facto nationalisation where it would have been kept as a going concern with taxpayer support.
Using German taxpayer money to pay bonuses to UK-based gas traders could prove controversial. Asked whether there might be adverse reaction from the German public, Laege said “German taxpayers have two interests — security of supply and making sure the money given to the company is [well-managed] and paid back some time.”
Asked why Sefe hadn’t tried to spin off its trading subsidiaries while maintaining control over the critical infrastructure assets, Laege said it was limited in its ability to restructure itself by the terms of its arrangement with the BNA. “Under the trusteeship that we have right now, there are strong limitations on breaking up the company,” he said.
Laege declined to comment on fears expressed by some in the industry that Sefe’s technology may be compromised because it was set up by Russian government security experts. “Fear is a bad adviser,” he said.
While he was “confident” that Germany could fill its gas storage to 90 per cent capacity as mandated by a new law, he said that should supplies from Russia continue to be curtailed, “it will be very very difficult to achieve that target”.
The Rehden storage facility is still only 17 per cent full.
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