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Bloomberg: Germany still trades Russian LNG as canceling costs over $10 billion

by Martin Fornusek October 20, 2023 11:53 AM 2 min read
Pipework stands at the second train liquefaction and purification facility during its official opening at the Yamal LNG plant, operated by Novatek PJSC, in Sabetta, Russia, on Thursday, Aug. 9, 2018. (Andrey Rudakov/Bloomberg via Getty Images)
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A German state-owned company continues to ship Russian liquified natural gas (LNG) to India, as canceling the contract could cost over $10 billion in taxpayer money, Bloomberg reported on Oct. 20, citing undisclosed sources.

SEFE, a former unit of the Russian Gazprom nationalized by the German government last year, reportedly continues to fulfill its legacy 20-year contract from 2018 to ship out Russian LNG from the Yamal facility.

The firm also has a separate contract to supply the Indian state company GAIL Ltd., Bloomberg noted. The outlet stressed that the shipments in question are not subject to international sanctions.

Should SEFE decide to breach the contract, it could cost Berlin at least 10 billion euros ($10.6 billion) in damages and penalties, which is more than the $6.7-$8.2 billion paid for the company's bailout, Bloomberg's sources said.

Based on the contract, the German firm is obliged to pay for the Russian gas regardless of whether it is transporting it or not.

If it decided not to transport Russian cargo, Moscow could sell it elsewhere and still demand payments from SEFE, thus increasing its profit, Bloomberg explained.

Despite Europe's pledge to wean itself off Russian fossil fuels following the invasion of Ukraine, several EU members have begun importing record amounts of Russian LNG in 2023. The Global Witness NGO reported in August that Spain and Belgium are among the world's leading importers of Russia's liquified natural gas.

However, despite being hooked on Russian gas for years, Europe managed to reduce the pipeline gas imports and decreased the share of Russian gas in the EU's energy mix from 40% to 10% in a year.

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