European energy companies have initiated legal proceedings against Gazprom, seeking €18 billion in compensation for losses incurred due to the suspension of Russian gas supplies.
The claims, which significantly exceed Gazprom’s available financial reserves, have intensified the legal and economic disputes between Russia and its former key gas importers.
Arbitration Claims and Their Background
The claims stem from Gazprom’s abrupt cessation of gas deliveries to European buyers, primarily due to the sabotage of the Nord Stream pipelines in 2022 and contractual disputes that arose after Russia’s invasion of Ukraine. The disruption of gas flows forced European energy companies to seek alternative and often costlier sources of supply, leading to financial losses for utilities and gas distributors across the continent.
The largest claim has been filed by Uniper, Germany’s former largest gas importer, which is seeking €14.3 billion. In June 2024, the Stockholm Arbitration Court ruled in favour of Uniper, ordering Gazprom to pay the full amount. The German company had been heavily reliant on Russian gas before supply cuts forced it to purchase gas at significantly higher market rates, leading to substantial financial losses and a state-backed bailout.
Poland’s Europol Gaz, which operated the Yamal-Europe pipeline, has lodged a €1.55 billion claim, citing financial damages from the termination of gas transit. The Yamal-Europe pipeline was a key route for Russian gas exports to Germany via Poland but has remained largely inactive since 2022.
Other European Energy Firms Seeking Compensation
Several other European energy companies have filed arbitration claims against Gazprom, including:
- Engie (France) – €305 million
- OMV (Austria) – €575 million
- CEZ (Czech Republic) – €58 million
- ZSE Energia (Slovakia) – €9 million
- Vychodoslovenska Energetika (Slovakia) – €4 million
- DXT Commodities (Switzerland) – €385 million
- Axpo Solutions (Switzerland) – €623 million
These firms argue that Gazprom violated long-term contractual obligations and failed to deliver agreed gas volumes, leading to financial losses. The impact has been particularly severe for European utilities that depended on Russian gas for electricity generation and heating.
Gazprom’s Legal Countermeasures
In response to the wave of arbitration claims, Gazprom Export has filed 13 counterclaims in the Arbitration Court of St. Petersburg, seeking to block legal proceedings in international arbitration venues. The Russian court unsurprisingly ruled in favour of Gazprom, issuing enforcement orders prohibiting arbitration in foreign jurisdictions.
The court justified its decision by citing European Union sanctions, which prohibit legal services for Russian firms. According to the Russian court, this restriction denies Gazprom the right to impartial and fair legal proceedings in European arbitration institutions. These enforcement orders have been issued against major European energy firms, preventing them from pursuing claims outside Russia.
Financial Impact on Gazprom
The total value of the claims—€18 billion—is nearly equal to Gazprom’s entire annual gas export revenue:
- $10 billion from gas sales to Europe and Turkey
- $7 billion from exports to China
- $2 billion from deliveries to CIS (Commonwealth of Independent States) and Central Asian countries
Gazprom’s financial reserves as of 30 September 2024 were reported at 933 billion roubles (€10.5 billion). This means the Russian gas giant lacks sufficient funds to cover the total compensation sought by European claimants, raising concerns about its ability to meet financial obligations amid declining exports and ongoing legal battles.
Broader Implications
The legal battle over gas supplies is a direct consequence of the European energy sector’s decoupling from Russian gas following Russia’s invasion of Ukraine. Prior to 2022, Gazprom was the dominant supplier of natural gas to Europe, accounting for 40% of the continent’s imports. However, by 2023–2024, European countries had largely replaced Russian gas with LNG imports from the United States and Qatar, as well as pipeline gas from Norway and Algeria.
The arbitration disputes underscore the lasting financial and geopolitical ramifications of Russia’s supply disruptions. While Gazprom continues to invoke Russian court rulings to block international claims, these decisions are unlikely to be recognised in European jurisdictions, raising further questions about the enforceability of Moscow’s legal countermeasures.
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