Key Points:
- Uniper secured the right to terminate dormant gas contracts with Gazprom and awarded over 13 billion euros in damages.
- This decision marks the end of a long-standing energy partnership between Berlin and Moscow.
- Despite the damages award, significant financial transfers are unlikely due to Gazprom’s counteractions.
- Uniper and the German government are working to secure gas supplies for southeastern Europe post-2023.
German utility Uniper said on Wednesday that it had secured a significant victory in a multi-billion euro arbitration case against former supplier Gazprom. The decision allows Uniper to terminate dormant gas supply contracts, potentially setting a precedent for similar cases in the energy sector.
Uniper, rescued by the German government in 2022 after Gazprom cut and later suspended gas supplies, had to procure replacement gas at exorbitant prices on the spot market. The ruling marks a critical turning point for Uniper, severing the last ties of a decade-long energy partnership between Berlin and Moscow, which disintegrated following Russia’s invasion of Ukraine in 2022.
The Stockholm arbitration tribunal’s ruling on June 7, initiated by Uniper in late 2022, enables the utility to cancel existing gas supply contracts that remained legally binding despite the cessation of gas flow. Additionally, the tribunal awarded Uniper over 13 billion euros ($14 billion) in damages for the undelivered gas volumes since mid-2022, when Gazprom first curtailed its contractual deliveries.
Last month, sources indicated that the tribunal’s decision could permit Uniper to terminate 250 terawatt hours of dormant Russian gas contracts, some extending into the next decade. Canceling these contracts mitigates a major risk ahead of Uniper’s planned return to the stock exchange next year.
“This ruling provides legal clarity for Uniper. With the right of termination that we received in the arbitration ruling, we are ending the contracts with Gazprom Export,” said Uniper CEO Michael Lewis. Despite this, Gazprom has not responded to requests for comment.
While the damages award is a symbolic win for Germany, legal sources suggest that significant sums will unlikely be transferred. Gazprom Export successfully contested the case in a St. Petersburg court, which ruled in March that Uniper and a subsidiary would be fined 14.3 billion euros if they proceeded with the arbitration. If any payments are made, they will go to the German government, which holds over 99% of Uniper.
The German Finance Ministry, overseeing the government’s stake in Uniper, clarified that it was not involved in the arbitration proceedings and had no influence over the company’s management. Terminating the contracts eliminates the last risk related to Uniper’s Russian exposure, following the write-downs of its investments in the Nord Stream 2 pipeline and its Russian subsidiary Unipro.
Uniper is also in discussions to ensure the continuation of gas supply through Ukraine to southeastern Europe, as Kyiv announced it would not extend its transit deal with Gazprom beyond this year. The German government and the European Commission are actively involved in these talks to secure gas supplies for southeastern Europe without benefiting Russia financially.
