India’s largest gas utility GAIL has launched an arbitration process in the hope of securing up to $1.81 billion in compensation from SEFE Marketing & Trading Singapore, previously known as Gazprom Marketing and Trading Singapore, over undelivered LNG volumes.
GAIL said in a stock exchange filling that it filed the claim in the London Court of International Arbitration on November 30.
The company is seeking “up to $1.817 billion and alternative reliefs including non-monetary reliefs.”
GAIL said the dispute is related to “non-supply of LNG cargoes to GAIL under long-term LNG contract.”
It did not provide any additional information.
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 Securing Energy for Europe (SEFE), previously Gazprom Germania, in November last year 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.
“Due to the sharp rise in gas prices over the course of the year, the company had to bear high costs for sourcing additional volumes to meet its existing supply obligations,” it said.
GAIL previously said that SEFE stopped supplying LNG to GAIL in May 2022 and that the deliveries resumed in May this year with about four LNG cargoes per month.
This means that SEFE did not supply up to 48 LNG cargoes to GAIL during the period.