Czech billionaire Karel Komarek recently announced that he is exploring options to remove Gazprom from the longstanding gas storage joint venture between his oil and gas production company MND (Moravske Naftove Doly) and Gazprom Germania. Komarek is the owner of the investment company KKCG group.
In his discussions with the Czech government, options being explored include how to seize or at least freeze Gazprom’s shareholding. Gas storage has become a strategic business since the EU agreed this month that member states should bring their levels up to 90% capacity by the start of this October to prepare for the coming winter so that the bloc is not so dependent on flows of Russian gas.
The joint venture was created in 2013, to build a UGS facility in Damborice, South Moravia for Kč2.5 billion (€100 million). Since Russia’s attack on Ukraine, the billionaire is against continued involvement with the country. In a statement to the media, he said: “There are very few options to fully divest from Russian gas in Eastern Europe … What we want to do is free ourselves from Russian involvement without putting ordinary Czech citizens at risk, in the middle of winter.”
In an open letter, Komarek condemned Russia’s actions in Ukraine, listed his support for Ukrainian refugees and outlined the reasons for his decision. “I took the decision many years ago to divest and exit from Russian assets with the exception of a shareholding in a gas terminal which we have been trying to exit for a number of years and a 50/50 joint-venture with Gazprom on a UGS facility in the Czech Republic.”
In spring 2021, Gazprom further strengthened its links with MND when its local affiliate Vemex agreed to buy most of the gas produced by MND. MND, which is co-owned by E.ON Ruhrgas, KKGC, Slovakia´s Slovensky Plynarensky Priemysel and Gaz de France, kept a few percent of the production it needed for its own operations.
Vemex supplies gas to 12 of the 35 largest Czech companies, including PKN’s Ceska Rafinerska, Vitkovice Steel, brewer Plzensky Prazdroj and Pilsen Steel. For Gazprom, this is a significant strengthening of its position in the market. In addition to supplying gas to Vemex, it also supplies RWE Transgas, which is the dominant supplier of natural gas in the Czech Republic.
In 2020, MND reported a net profit of Kč64 million and sales of Kč45.7 billion (up from Kč227 million a year earlier).
We have recently met UGS Experts at our conference.