Gazprom, the Russian energy giant, has been ordered to pay €13 billion to Germany’s Uniper after failing to fulfill gas orders following the war in Ukraine. This ruling allows Uniper to officially cut ties with Gazprom, which it heavily relied on until supplies were disrupted due to Vladimir Putin’s invasion. The German government had to provide an €8 billion bailout to Uniper in September 2022, leading to the company’s nationalization. Uniper, a power generator with assets across Europe, including the UK, where it supplies 7% of the country’s electricity.
The €13 billion award was the result of an arbitration hearing where Gazprom was found guilty of breaching gas supply contracts. This decision caused European gas prices to rise by 2.6%, signaling concerns among energy traders about potential disruptions to Russian gas deliveries in Europe. Uniper announced the termination of its long-term gas supply contracts with Gazprom and the legal end of their relationship. The arbitration tribunal awarded Uniper damages for the gas volumes not supplied by Gazprom since mid-2022.
As both companies are government-owned, some view this legal battle as more than just a corporate dispute. There are doubts as to whether Putin will allow Gazprom to pay the amount owed to Uniper, as it would ultimately go to the German federal government. Uniper is one of the world’s largest power producers with generation capacity across several countries, primarily using gas and coal. The company aims to become carbon neutral by 2040 and has assets including coal-fired power stations like Ratcliffe-on-Soar in the UK, which is set to close in September.
Uniper’s CEO noted that Russia’s actions in Ukraine and gas supply cuts to Europe forced the company to seek gas from global markets at higher prices, leading to the state bailout. Uniper has been diversifying its gas business over the past few years by moving away from Russian investments and focusing on global LNG portfolios and pipeline gas supplies from various regions. The termination of contracts with Gazprom Export is the latest step in this strategic shift by Uniper to adapt to changing market conditions.