Uniper initiates arbitration against Gazprom, cites 'damages'
4 Min Read
The largest gas importer in Germany sees Russia's Gazprom failing to deliver gas to Germany due to the sanctions imposed on the state.
-
A Uniper sign is seen near a power plant
The largest gas importer in Germany, Uniper, initiated Wednesday arbitration proceedings against Russia's Gazprom Export over alleged "damages" sustained due to undelivered gas.
"Uniper has initiated arbitration proceedings against Russia's Gazprom Export (GPE) before an international arbitral tribunal," the statement read.
"In the proceedings, which will take place in Stockholm, Uniper is claiming damages incurred by the company in connection with the gas volumes not delivered by GPE since June," the company further explained.
The gas replacement costs alone, according to the German company, currently amounts to at least 11.6 billion euros ($12.02 billion), a sum that will continue growing until the end of 2024.
Uniper, Germany's largest gas importer, felt the pain of sky-high energy prices as it struggles to replace Russian gas supplies amid mounting losses, as per its CEO Klaus-Dieter Maubach.
Back in September, the CEO cautioned that the company might run out of money provided by Berlin in the form of an aid package later in the month.
Due to reduced Russian gas supplies, which Moscow blamed on technical issues and Western sanctions, Uniper was forced to compensate for the lost volumes by purchasing gas at high spot market prices and selling it to customers at lower long-term prices.
As a result, the company reportedly made a loss of more than $12 billion as early as July, forcing the government to intervene.
The government compensated Uniper for its losses by acquiring a 30% stake in the company and providing it with an additional $7.7 billion aid package to help it survive until the fourth quarter of 2022. Uniper now admits that it would be insufficient.
The difficulties Germany is facing have been confirmed by a statement made by NATO Secretary-General Jens Stoltenberg on Sunday when the Western alliance's chief said support for Ukraine was draining Europe due to the high costs it incurs for Europeans.
According to the NATO chief, EU member states should continue sending military supplies to Kiev since "the best way to maintain peace is to support Ukraine."
Germany has been a major supporter of Kiev's since the start of the war, with Ukraine becoming the second-largest importer of German weapons after Berlin approved the exportation of $584 million worth of weaponry to Ukraine within the first 6 months of 2022.
Meanwhile, in the first half of the year, the EU supported Ukraine with €1.2 billion in loans and billions in arms and weapons deliveries, and in July it agreed to provide an assistance package worth €9 billion of which €1 billion were dispatched last summer and another €5 billion are already approved but not yet delivered.
Despite pledging more assistance, senior EU officials admit that there will most likely be a "crunch point" in the fall or early winter when EU countries begin to feel acute domestic economic pain as a result of the crisis.
Germany has also been bearing the brunt of the Ukraine crisis more than anyone else, with the head of the Federal Network Agency Klaus Müller saying earlier in the month that though Germany has decent stockpiles of gas, the winter can be quite the long one for the country.
German President Frank-Walter Steinmeier said a week earlier that German citizens would need to learn to be modest and accept the sacrifices and losses they are going through during the current crisis.
Meanwhile, Alternative for Germany party (AfD) co-chair Tino Chrupalla underlined that Germany won't be Europe's gas hub for the sale of hydrocarbons - instead, it will have to purchase Russian fossil fuels from other countries, including Turkey.
This comes despite Germany announcing in mid-October that its gas reserves have been filled up to 95% faster than anticipated.
Berlin has also implemented policies that permit the use of more coal-based energy and lower energy consumption in public structures.
Additionally, it has invested 1.50 billion euros ($1.46 billion) in the purchase of liquefied natural gas from Qatar and the United States, two of its key suppliers. Five new LNG terminals are also being developed for the purpose of importing LNG by sea.
