GAIL Seeks $1.8 Billion From Ex-Gazprom Unit Over Gas Contract Breach

State-owned Gail India on Friday said it has initiated legal proceedings against a former unit of Russian energy giant Gazprom for non-delivery of LNG and has sought $1.817 billion in damages.

In a stock exchange filing, the gas utility said it has filed an arbitration claim before the London Court of International Arbitration for "non-supply of LNG cargoes under long-term contract." 

GAIL in 2012 signed a 20-year deal to buy as much as 2.85 million tonnes per annum of liquefied natural gas (LNG) with Russian energy giant Gazprom.

The deal was signed with Gazprom Marketing and Singapore (GMTS), which at the time was a unit of Gazprom Germania, now called Sefe.

The Russian parent gave up ownership of Sefe after Western sanctions were imposed on Moscow over its invasion of Ukraine last year.

Sefe had stopped supplying LNG to the Indian company in June last year to meet its own demand.

GAIL in the filing said it has sued "SEFE Marketing & Trading Singapore Pte Ltd (erstwhile Gazprom Marketing and Trading Singapore Pte Ltd)" and has sought "up to USD 1.817 billion and alternative relief including non-monetary reliefs." The claim was filed on Friday, the filing added.

Originally, GAIL had signed up with the German subsidiary of Gazprom, and a step-down company based in Singapore for sourcing of gas. After the invasion, the German government took over the company, and the supplies were hindered as the German government debarred the company from picking up any cargo from Russia.

GAIL believes the contract was a portfolio contract and supplies cannot be stopped in any way. If there were problems in sourcing from Russia, the supplier should have arranged for the cargo from other destinations.

Sefe resumed normal supplies in April this year.

GAIL signed a 20-year deal with Gazprom Marketing and Singapore (GMTS) in 2012 to buy 2.85 million tonnes per annum of LNG. Supplies started in 2018 and the full volume was to reach in 2023.

GMTS had signed the deal on behalf of Gazprom. GMTS was moved to Gazprom Germania, now called Sefe. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.

This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked force majeure and stopped supplies to India from June 2022.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)