Daily Newsletter

05 December 2023

Daily Newsletter

05 December 2023

Gail India files $1.82bn arbitration claim against former unit of Gazprom

The lawsuit for non-supply of liquid natural gas (LNG) cargoes has been filed in the London Court of International Arbitration.

Archana Rani December 04 2023

State-owned Gail India has filed a lawsuit against a former unit of Russian energy giant Gazprom, seeking $1.82bn in damages for the non-delivery of LNG.

The gas utility has lodged an arbitration claim, alleging "non-supply of LNG cargoes under long-term contract" in the London Court of International Arbitration, reported PTI.

In 2012, Gail signed a 20-year agreement with Gazprom Marketing and Singapore (GMTS) to purchase as much as 2.85 million tonnes per annum of LNG from the latter.

At that time, GMTS was a unit of Gazprom Germania, which is now called Sefe.

In April 2022, GMTS was moved to Gazprom Germania after the Russian parent Gazprom gave up the ownership of the German unit (Sefe) due to the sanctions imposed by the Western nations following Moscow’s invasion of Ukraine.

Subsequently, Sefe stopped LNG supplies to the Indian company in June 2022 to meet its own demand. However, the company resumed supplies in April 2023.

As per the LNG deal, the Russian company is entailed to commence supplies in 2018 and reach the full volume in 2023.

In a stock exchange filing, Gail said it has sued “SEFE Marketing & Trading Singapore Pte Ltd (erstwhile Gazprom Marketing and Trading Singapore Pte Ltd)” and is seeking “up to $1.817bn and alternative relief including non-monetary reliefs”.

According to Gail, the agreement was for a portfolio, and LNG supplies cannot be halted. Should there have been issues with sourcing from Russia, the supplier could have made cargo arrangements from alternate locations.

In November 2023, Gail rejected a compensation offer from Gazprom’s former unit for undelivered LNG as it looked to retain the right to the missed LNG cargoes, reported Reuters citing four familiar sources.

The Sefe’s compensation offer is equivalent to 20% of the LNG cost in line with the original LNG contract terms.

One of the sources said: "We are not accepting the penalty as this would give them (Sefe) an exit route from the contractual obligation. We don't want to lose our right to buy the cargoes again.”

ESG 2.0 will be less forgiving of poor ESG performers

While ESG 1.0 was driven by voluntary corporate action, ESG 2.0 is being driven by a new wave of government policies. A host of new environmental laws are in the pipeline, relating to mandatory reporting, carbon pricing, and carbon import tariffs, as well as more state support and investment in clean energy technologies. Companies unprepared for ESG 2.0 face higher costs and lost sales.

Ammonia and Methanol in Energy Transition

Ammonia and methanol are key industrial chemicals with strong demand in the agriculture, manufacturing, and construction sectors. The demand for these chemicals is expected to rise in the coming years due to their potential applications in energy transition. Low-carbon ammonia is garnering the most attention from oil and gas industry players with nearly 300 plants in development globally.

Newsletters by sectors

close

Sign up to the newsletter: In Brief

Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Thank you for subscribing

View all newsletters from across the GlobalData Media network.

close