GAIL, SEFE settle LNG supply dispute

German gas importer Securing Energy for Europe (SEFE) and GAil announced the settlement in separate statements.

SEFE said the two firms reached an amicable settlement regarding the arbitration proceedings initiated by GAIL related to the non-supply of LNG cargoes to the Indian firm during 2022/2023.

Deliveries to GAIL have been restored since March 2023.

SEFE said the settlement includes a payment of $ 285 million by SM&TS to GAIL and withdrawal of the arbitration proceedings.

The parties are “committed to moving forward with their long-term relationship,” the company said.

GAIL announced in December 2023 that it launched an arbitration process in the hope of securing up to $1.81 billion in compensation from SM&TS over undelivered LNG volumes.

The state-owned firm filed the claim in the London Court of International Arbitration on November 30.

After that, SM&TS rejected GAIL’s $1.81 billion claim.

GAIL said that SEFE stopped supplying LNG in May 2022 and that the deliveries resumed in May 2023 with about four LNG cargoes per month.

In 2012, the Indian firm and Gazprom’s unit signed the sales and purchase deal for 2.5 mtpa of LNG.

The contract started in 2018 and ends in 2041, according to GIIGNL data.

However, the German government took over SEFE, previously Gazprom Germania, in November 2022 saying the move is necessary to protect its energy security due to Russia’s ongoing war in Ukraine.

Prior to that, the management of SEFE applied to the German government for stabilization measures.

This request was necessary as Russian sanctions against SEFE were leading to the suspension of gas deliveries, SEFE said.