According to a letter seen by Reuters, Russia’s Gazprom has informed European clients that it cannot guarantee gas supply due to ‘exceptional’ conditions, increasing the ante in an economic brawl with the West over Moscow’s invasion of Ukraine.

The Russian national gas monopoly announced in a letter dated July 14 that it was imposing force majeure on deliveries going back to June 14. The announcement comes while Nord Stream 1, the crucial pipeline that transports Russian gas to Germany and abroad, is undergoing yearly maintenance, which is set to end on Thursday. 

The letter fueled European worries that Moscow will halt construction of the pipeline in retribution for sanctions imposed on Russia for the Ukraine conflict, exacerbating an energy crisis that threatens to plunge the area into recession.

Force majeure, sometimes known as a ‘act of God’ provision, is used in commercial contracts and specifies exceptional circumstances that relieve a party from legal responsibilities.

Gazprom (GAZP.MM) did not reply to a comment request.

Russian gas supplies have been falling for many months across main routes, including Ukraine and Belarus, as well as Nord Stream 1 beneath the Baltic Sea.

According to a trade insider who asked not to be named because to the delicacy of the matter, the force majeure affected supply through Nord Stream 1.

“This sounds like a first hint that the gas supplies via NS1 will possibly not resume after the 10-day maintenance has ended,” said Hans van Cleef, senior energy economist at ABN Amro.

“Depending on what ‘extraordinary’ circumstances are in mind in order to declare the force majeure, and whether these issues are technical or more political in nature,” he continued, “it could mean the next step in escalation between Russia and Europe/Germany.”

Uniper, Germany’s largest importer of Russian gas, was among those who stated they had received a letter, and that the claim had been officially rejected as unwarranted.

RWE (RWEG.DE), Germany’s biggest power producer and another Russian gas importer, has also received a force majeure warning.

“Please understand that we cannot comment on its details or our legal opinion,” the business said.

Source: Reuters


Please enter your comment!
Please enter your name here