GAIL files $1.817-billion case against Singapore-based SEFE over LNG deal dispute with Russia link

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

Supplies started in 2018 and the full volume was to reach in 2023.

The deal was signed with Gazprom Marketing and Singapore (GMTS), which at the time was a unit of Gazprom Germania, now SEFE. But in early April last year, Gazprom gave up the ownership of the German unit without giving a reason and placed parts of it under Russian sanctions.

This followed the West slapping sanctions on Russia for its February 24 invasion of Ukraine. It invoked a force majeure and stopped supplies to India from June 2022.

The Russian parent gave up ownership of SEFE after Western sanctions were imposed on Moscow over its invasion of Ukraine last year. SEFE had stopped supplying LNG to the Indian company in June last year to meet its demand.

Originally, GAIL had signed up with the German subsidiary of Gazprom, and a step-down company based in Singapore for sourcing of gas. After the invasion, the German government took over the company and the supplies got hindered as the German government debarred the company from picking up any cargo from Russia.

GAIL believes the contract was a portfolio contract and supplies cannot be stopped in any way. If there were problems in sourcing from Russia, the supplier should have arranged for the cargo from other destinations. SEFE resumed normal supplies in April this year.

Shares of GAIL (India) Ltd ended at ₹136.15, up by ₹4.50, or 3.42%, on the BSE.