Gazprom began slowing down its gas supplies to Europe, particularly Germany, in June 2022. At the end of August of the same year it stopped them entirely
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The Stockholm International Arbitration Court has granted German energy company Uniper the right to seek compensation of more than 13 billion euros from Gazprom for reducing gas supplies over the past two years.
After the start of the conflict between Russia and Ukraine in February 2022, Gazprom invoked “force majeure” to justify the reduction of gas supplies and the possible complete blockade of the Nord Stream pipelines.
A state of force majeure usually allows a company to be released from ongoing contractual obligations, as well as any resulting legal action. However, to be accepted, the event in question must be extremely unpredictable, with no possibility of controlling it.
In addition to Uniper, Gazprom had also invoked force majeure with other European customers, including the German energy company RWE Group. In the case of Uniper, Gazprom did not reveal in detail the reasons behind its decision, which led Uniper to take legal action. The resulting arbitral tribunal decision gave the German company the right to end its existing long-term gas supply contracts with Gazprom.
For Uniper, which was heavily dependent on gas supplies from Gazprom, the reduction in supplies was a major 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 staggering losses for a long period, pushing it to the brink of insolvency.
Michael Lewis, CEO of Uniper, said in a press release: “This ruling provides legal clarity to Uniper. With the right of withdrawal that we received in the arbitration ruling, we put an end to the contracts with Gazprom Export. The termination of the contracts with Gazprom Export is the latest in a series of consistent decisions made over the past three years. Over this period, Uniper has canceled its share of financing of the Nordstream 2 pipeline, its stake in Russian subsidiary Unipro and allowed its supply contracts to lapse. of coal with Russia”.
Lewis also clarified that, since then, Uniper has taken additional steps to expand and diversify its gas arm and its suppliers.
Supplies in fits and starts
Gazprom’s gas supplies to Europe have been reduced in stages over several months: in June 2022 supplies from the Nord Stream 1 pipeline were reduced by around 75%, falling to 40 million cubic meters from 170 million of cubic meters per day.
Then, in July 2022, Russia closed Nord Stream 1 for maintenance and repairs for about 10 days. However, supplies were further reduced to 20 million cubic meters once operations were resumed. At the end of August 2022 the Nord Stream 1 pipeline was shut down entirely, due to equipment problems. Since then, the pipeline has no longer been in operation.
In September 2022, a series of explosions occurred in both the Nord Stream 1 and Nord Stream 2 pipelines. Those responsible have not yet been identified.
