The energy company Uniper wins the right to claim billions from Gazprom

The Stockholm International Court of Arbitration has awarded the German energy company Uniper the right to claim more than 13,000 million euros from Gazprom as compensation for the reduction in gas supply during the last two years.

After the start of conflict between Russia and Ukraine In February 2022, Gazprom alleged “force majeure” to justify gas supply reductions and the eventual total paralysis of the Nord Stream gas pipelines.

A state of force majeure usually allows a company to be excused from its current contractual obligations, as well as any resulting legal prosecution. However, to be accepted, the event in question must be extremely unpredictable, without any possibility of control. In addition to Uniper, the force majeure notice has been issued to other European customersincluding the German energy company RWE Group.

In the case of Uniper, Gazprom has not revealed further details about why the company claimed force majeure, which caused Uniper to reject the notice. The arbitration court’s decision has given the German company the right to terminate its long-term gas supply contracts with Gazprom.

For Uniper, which was heavily dependent on gas supplies from Gazprom, the reduction in supplies came as a huge shock, forcing it to look for other, much more expensive suppliers on the spot gas market at very short notice. This led the company to suffer large losses over a long period of timewhich put it on the verge of insolvency.

Michael Lewis, CEO of Uniper, stated in a press release: “This ruling provides legal clarity for Uniper. With the right of termination granted to us by the arbitration award, we terminate the contracts with Gazprom Export.”

Uniper’s legal position on the issue of damages was also confirmed. Any amount would go to the german federal government. From the current perspective, it is not yet clear whether significant quantities can be expected.

“Our termination of the contracts with Gazprom Export is the latest in a series of consequential decisions over the last three years. During this time, Uniper has written down its stake in the financing of the Nordstream 2 gas pipelineits stake in the Russian subsidiary Unipro and has let its coal supply contracts with Russia expire.”

Lewis also clarified that Uniper has since taken additional steps to expand and diversify its gas branch and its suppliers.

Gazprom interrupts gas supplies to Europe for months

Gazprom’s gas supplies to Europe were reduced in stages over several months. In June 2022, Nord Stream 1 gas pipeline supply cut by approximately 75%up to 40 million cubic meters, from 170 million cubic meters per day.

Then, in July 2022, Russia closed Nord Stream 1 for maintenance and repairs for about 10 days. However, supply was reduced to 20 million cubic meters once it was back online.

At the end of August 2022, the Nord Stream 1 gas pipeline was completely closedapparently due to equipment problems. The gas pipeline has since been out of service.

In September 2022, the Nord Stream 1 and Nord Stream 2 gas pipelines suffered a series of mysterious explosionsnone of which have yet been attributed to a specific actor.