Russia puts sanctions on Gazprom units in Europe and US, part owner of pipeline

  • Russian government publishes list of affected firms
  • Presidential decree of May 3 had banned trade with firms on list

LONDON, May 11 (Reuters) – Moscow has imposed sanctions on Gazprom, whose subsidiaries service Europe’s gas consumption .

The entities on a list of affected companies on a Russian government website on Wednesday were largely based in countries that have imposed sanctions on Russia in response to its Invasion of Ukraine, now of them 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. Eastbound gas flows continued via the Yamal-Europe pipeline from Germany to Poland, data from the Gascade pipeline operator showed.

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Energy prices rose on Wednesday as the European Union weighs a possible embargo on Russian crude, while trading firms are set to cut activity with Russia when tighter EU rules on Russian oil sales come into effect on May 15. read more

Russian President Vladimir Putin decreed on May 3 that no Russian entity would be allowed to make deals with those on the sanctions list, or even fulfill its obligations under existing deals. read more

The decree explicitly forbids the export of products and raw materials to people and entities on the list.

Russia’s Interfax news agency received these comprised Polish pipeline owner EuRoPol Gaz, Gazprom Germania, and 29 Gazprom Germania subsidiaries in Switzerland, Hungary, Britain, France, Bulgaria, the Benelux region, the United States, Switzerland, Romania and Singapore.

Gazprom supplies much of its gas to Europe via the Yamal-Europe pipeline, and its various activities across and outside Europe are essential for the European gas market and its supply to industry and households.

Germania operations, based on Russian gas production, cover the entire gas value chain from pipeline transmission to storage and supplies to wholesalers and retailers.

Gazprom gave up ownership of the firm last month without explanation, forcing Germany’s energy network regulator to take control of operations there. read more

Those operations include Germany’s largest gas storage facility at Rehden in Lower Saxony, with 4 billion Cubic meters of capacity.

The German economy ministry said it was examining the Russian announcement on Gazprom Germany but still had no details. The supply of gas is currently guaranteed and is being constantly checked, the ministry said. read more

“The German government and the Federal Network Agency, as trustees of Gazprom Germany, are already in the process of taking the necessary precautions and preparing for various scenarios,” the spokesperson said in a statement.

Putin framed his decree as a response to what they cast as the illegal actions of the United States and its allies meant to deprive “the Russian Federation, citizens of the Russian Federation and Russian legal entities of property rights” or to restrict their property rights.

The United States and its allies have imposed the most severe sanctions in modern history on Russia and Moscow’s business elite, steps that Putin casts as a declaration of economic war.

“The intent is clear – just Reciprocating the actions by Western Europe and they get to control the revenue and gas flows,” said Ramanan Krishnamoorti, chief energy officer at the University of Houston.

Putin, 69, repeatedly warned that Moscow would respond in kind, although until last week the Kremlin’s toughest economic response had been to cut off gas supplies to Poland and Bulgaria and demand a new payment scheme for European buyers of gas.

Gaz-System, the operator of the Polish section of the Yamal-Europe pipeline, could not immediately be reached for comment.

EuRoPol Gaz, jointly owned by Gazprom and Poland’s largest gas company, PGNiG, (PGN.WA), and earns transit fees for Russian gas crossing Poland. PGNiG had no immediate comment.

Wingas, a subsidiary of Gazprom Germany and one of Germany’s largest gas traders, received after the takeover by the German regulator that it would continue operating under the changed parameters.

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Reporting by Reuters; Writing by Kevin Liffey; Editing by Alex Richardson, Grant McCool and Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.

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