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Business News/ Companies / News/  GAIL initiates legal proceedings against former Gazprom unit for default in LNG supplies, seeks $1.8 billion in damages
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GAIL initiates legal proceedings against former Gazprom unit for default in LNG supplies, seeks $1.8 billion in damages

GAIL sues former Gazprom unit for default in LNG supplies, seeks $1.8 billion

GAIL sued former Gazprom unit for default in LNG supplies, the company has sought $1.8 billion in damagesPremium
GAIL sued former Gazprom unit for default in LNG supplies, the company has sought $1.8 billion in damages

State-owned GAIL India has sued the former Gazprom unit, now run by SEPE Marketing & Trading Singapore Pte Ltd, for default in LNG Supplies. The company has also sought a compensation of $1.8 billion for its damages, said the PSU in its stock exchange filing on Friday. 

Also Read: GAIL share price rise more than 3% to scale 52 week high on improved earnings prospects led by strong gas demand

The dispute between the two companies was raised after the former Gazprom unit failed to supply LNG cargo to GAIL under a long-term LNG Contract. GAIL shares closed 3.42% higher at 136.15 per share on BSE on Friday. 

"SEFE Marketing & Trading Singapore Pte Ltd (erstwhile Gazprom Marketing and Trading Singapore Pte Ltd)" and has sought "up to USD 1.817 billion and alternative relief including non-monetary reliefs," said the Indian PSU in its stock exchange filing on Friday.

Also Read: Reliance, Gail, IOC’s petchem margins to remain suppressed, says Prabhudas Lilladher; downgrades RIL

The petrochemical company, in its stock exchange filing, said that it has filed an arbitration claim before the London Court of International Arbitration for non-supply of LNG cargoes under a long-term contract.

About the GAIL-GMTS LNG supply deal 

IN 2012, GAIL signed a 20-year deal to buy as much as 2.85 million tonnes per annum of liquefied natural gas (LNG) with Russian energy giant Gazprom.

Also Read: GAIL India Q2 Results: Net profit jumps 70% to 2,405 crore; revenue dips 1.3% QoQ

The deal was signed with Gazprom Marketing and Singapore (GMTS). At the time of finalising the deal, GMTS as a unit of Gazprom Germania now turned into Sefe. The company was separated from the Russian parent firm after the West imposed sanctions on Moscow followed by the Ukrainian invasion. The dispute between Sefe and GAIL began a year ago when the former stopped supplying LNG to the Indian company in June 2022 to meet its own demand.

The LNG supply deal between GAIL and Gazprom went awry after Russia began its invasion of Ukraine. Originally, GAIL had signed up with a German subsidiary of Gazprom, and a step-down company based in Singapore for sourcing gas. After the invasion, the German government took over the firm preventing the company from picking up any cargo from Russia. 

Considering the deal a portfolio contract, GAIL stressed that the supplies cannot be stopped in any way. The Indian company also mentioned that the former Gazprom unit must have explored other options for cargo if sourcing from Russia was not possible. Sefe resumed normal supplies in April this year.

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Published: 01 Dec 2023, 06:25 PM IST
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