Europe demands $17 billion from Gazprom for undelivered gas

Cutting off gas to European countries in order to “freeze” customers on the only large export market may cost Gazprom dearly.

European companies successively file claims against the Russian gas monopoly for compensation for losses, the total amount of which as of May 2023 may exceed USD 17 billion.

On Thursday, the Polish Europol Gaz announced the start of arbitration proceedings with Gazprom. The company operating the Polish section of the Yamal-Europe gas pipeline, which transported gas from Western Siberia to consumers in Germany, is demanding PLN 6 billion, or USD 1.45 billion.

This amount includes PLN 850 million in delayed payments for gas transmission and another PLN 5 billion in “lost profits,” said Jacek Sasin, Minister of State Assets (quoted by Reuters).

Around 10 companies have already filed lawsuits against Gazprom. The record – 12.5 billion dollars – comes from the German Uniper, which bought 20 billion cubic meters of gas a year from Russia.

As Germany’s largest importer of Russian gas and one of the investors in the Nord Stream 2 project, Uniper was on the verge of bankruptcy and de facto nationalized after being left without a key supplier and forced to buy fuel at exorbitant prices on the spot market. The German government spent 29 billion euros to save the company.

RWE, another German gas importer, which received 1 billion cubic meters annually, demands another $1 billion from Gazprom.

France’s Engie has demanded about $1.3 billion from Gazprom, based on imports of 2 billion cubic meters a year, BCS analyst Ronald Smith previously estimated.

Italy’s Eni filed the lawsuit in May without disclosing the amount. However, taking into account the volume of purchases – approx. EUR 20 billion – they can be counted in billions of euros, as in the case of German importers.

At the end of February, the claims of European customers against Gazprom amounted to USD 15 billion, and after the lawsuits of Eni and Europol Gaz it is already at least USD 17 billion, according to The Moscow Times.

By demanding payment for gas in rubles and receiving refusals, Gazprom lost half of its gas exports last year. Sales to foreign markets – 100 billion cubic meters – became the lowest since the last years of the USSR.

This year, according to the forecasts of the Energy Commission of the State Council, gas exports will again decrease by half and amount to only 50 billion cubic meters. Of this, China will receive 22 bcm via the Power of Siberia gas pipeline, while exports to Europe and Turkey will fall to 28 bcm, three times compared to 2022. Its total volume may be the lowest since the mid-1970s.