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German Uniper cancels contract with Gazprom after arbitration ruling

by Martin Fornusek and The Kyiv Independent news desk June 12, 2024 2:29 PM 2 min read
A Gazprom compressior station, the starting point of the Nord Stream 2 gas pipeline, in Ust-Luga, Russia, Jan. 28, 2021. (Andrey Rudakov/Bloomberg via Getty Images)
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An arbitration court awarded Germany's largest gas importer, Uniper, the right to terminate a long-term contract with Russia's Gazprom and more than 13 billion euros ($14 billion) in damages for failed gas deliveries, Uniper said on June 12.

The June 7 ruling by a Stockholm court allowed the German company to terminate its long-term contracts for Russian gas and the "relationship with the Russian state-owned company Gazprom Export" on June 12.

Russia began tightening screws on gas supplies to Europe in the wake of the full-scale invasion of Ukraine and subsequent Western sanctions.

According to Uniper, the sum of $14 billion is meant to compensate for the gas not provided since mid-2022.

"Although only limited gas volumes had been delivered since June 2022 and no gas volumes since the end of August 2022, the long-term gas supply contracts between the two companies were still legally in force, and individual contracts would have continued to exist until the mid-2030s," Uniper's statement read.

After suffering "substantial losses due to the Russian gas supply restrictions," the company initiated arbitration against Gazprom in late 2022.

Uniper, Germany's largest gas importer, encountered difficulties in 2022 due to the reduction of Russian imports and turned to the German government for assistance. Subsequently, the government nationalized the company by becoming its majority shareholder.

The drop in Russian fossil fuel imports to Europe hit Gazprom hard as well. According to a report commissioned by the company, the state-owned giant will not be able to recover losses incurred from Moscow's full-scale invasion of Ukraine for at least 10 years.

Gazprom won’t recover losses from full-scale war, report says
“The main consequences of sanctions for Gazprom and the energy industry are the contraction of export volumes, which will be restored to their 2020 level no earlier than in 2035,” the report said.

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