Russia’s Gazprom is facing further arbitration proceedings, with German energy supplier RWE saying it has filed a claim after the Russian gas giant reduced and then halted natural gas deliveries to the Germany earlier this year.
The claim by RWE follows compatriot Uniper’s filing at the end of November against Gazprom’s wholly owned gas export subsidiary Gazprom Export over the lack of gas deliveries.
RWE has not revealed any details of the claim, including an assessment of the damages it is seeking to recover from Gazprom, with a company spokesperson only confirming that the German player took "the necessary legal action in respect of non-deliveries".
In its financial report for the first quarter of this year, RWE said that, at the beginning of March, contractual gas procurement volumes from Russian producers totalled about 1.45 billion cubic metres of gas through to the end of 2023.
It added that RWE had contracts for commodity deliveries from Russia at fixed prices significantly below the current market level.
“We must compensate for lost volumes by making purchases from third parties at much less favourable conditions to meet existing supply obligations,” RWE said in the report.
The company also said it has had to “conclude financial hedges to substantially reduce the associated risk” of non-delivery of Russian pipeline gas.
Gazprom reduced deliveries of Russian gas to Germany via the Nord Stream 1 subsea pipeline in the middle of this year before halting them completely in early September, citing technical issues related to international sanctions against the country and its corporations that were imposed following Russia’s invasion of Ukraine in February.
The Russian gas giant also stopped using the onshore Yamal Pipeline running across Belarus and Poland to Germany, claiming it was not allowed to do so by the Russian government in response to an earlier German decision to put Gazprom’s European gas distribution subsidiary Gazprom Germania under governmental trusteeship.
At the end of November, Germany’s largest importer of Russian pipeline gas, Uniper, filed a similar arbitration claim against Gazprom’s wholly owned gas export subsidiary Gazprom Export.
Uniper claimed that the lack of gas deliveries from Gazprom Export led to the German company carrying “the entire replacement costs” of gas that it had to procure from other sources.
“These gas replacement costs alone, currently amount to at least €11.6 billion ($12.1 billion) and will continue to grow until the end of 2024,” Uniper said.
Gazprom has not commented on the latest arbitration filings by the two German companies.
European exit
However, it has continued efforts to reduce its exposure to the European market, announcing an upcoming opportunity for Russian investors to buy its domestic bonds.
Gazprom is looking to raise sufficient capital inside Russia to enable it to cancel two tranches of its existing Eurobond issues, the first for about $2 billion that expires in 2029, and the second for $1 billion, which expires in 2031, the company said.
Earlier this month, Gazprom increased slightly its gas supplies to southern Europe via the TurkStream subsea pipeline across the Black Sea, with nominations for existing gas flows from Turkey to Bulgaria rising by about 22% to over 44 million cubic metres per day of gas at the beginning of December against the end of November.
Gazprom’s transit gas supplies via Ukraine to Moldova, Slovakia, the Czech Republic, Austria and Italy have remained stable at slightly more than 42 MMcmd, but still lower that the contracted minimum volume of close to 110 MMcmd.
Two strings of the Nord Stream 1 pipeline had been capable of carrying more twice the current volume of gas been supplied by Gazprom to Europe via Ukraine and Turkey before the subsea pipelines were taken out of service following damage by explosions at the end of September.
