Russia’s Gazprom Imposes Force Majeure On Some European Gas Shipments

According to a letter from Russia’s oil and gas giant Gazprom, the company has declared force majeure on gas supply to Europe for at least one large customer, adding to European fears of fuel shortages.

The legal force of the letter, dated July 14 and reviewed by Reuters on Monday, is to insulate Gazprom from compensation payments for disrupted supplies, but it risks raising tensions between Russia and the West over the invasion of Ukraine, which Moscow terms a “special military operation.”

According to the letter, Gazprom, which has a monopoly on Russian gas exports via pipeline, was unable to meet its supply obligations due to “exceptional” circumstances.

It stated that the force majeure provision, which allows a company to be released from contractual commitments due to conditions beyond its control, was retroactively effective beginning June 14.

The letter, according to a trading source who asked not to be identified due to the delicacy of the topic, concerned shipments via the Nord Stream 1 pipeline, a significant supply route to Germany and beyond.

Gazprom did not respond immediately.

The Nord Stream 1 pipeline is closed for annual maintenance, which is scheduled to end on July 21, but some of Gazprom’s European clients are concerned that supplies would be disrupted.

One of them, Austrian oil and gas giant OMV, said on Monday that it expected gas exports from Russia to restart as planned through the Nord Stream 1 pipeline.

Even before Nord Stream began maintenance on July 11, Gazprom limited exports across the Baltic Sea pipeline to Germany on June 14, citing a turbine being fixed in Canada by equipment supplier Siemens Energy.

Gazprom’s declaration of force majeure takes effect on June 14, absolving it of any liability for deficits since then.

The European Union, which has put sanctions on Moscow, intends to phase out Russian fossil fuels by 2027 but wants supply to continue for the time being while alternative sources are developed.

Russian gas supplies have decreased via main routes such as Ukraine and Belarus, as well as Nord Stream 1 under the Baltic Sea.

(Adapted from Reuters.com)

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