German government demands from former subsidiary of “Gazprom to terminate the contract for the supply of LNG from Russia
12 November 10:12
The German Ministry of Economy has demanded that the state-owned energy company SEFE (Securing Energy for Europe GmbH), which was previously owned by Gazprom, terminate the contract for the supply of Russian liquefied natural gas. Bloomberg writes about this with reference to a statement from the ministry, "Komersant Ukrainian" reports.
The ministry noted that the company could terminate the agreement using the force majeure mechanism. This legal clause, which allows companies not to fulfill their contractual obligations, can be used against the backdrop of the latest European Union sanctions against Moscow and the bloc’s desire to abandon Russian energy supplies, the document says.
SEFE has already been criticized for continuing to fulfill a long-term contract with the Yamal LNG plant in Siberia, the agency reminds. The current contract provides for the supply of 2.9 million tons of LNG annually and is valid until 2040. The cost of a possible termination of the agreement is estimated at about 10 billion euros (about $11.6 billion). According to Bloomberg, in October, the company said it was studying the implications of the latest European sanctions on its obligations, but had not yet made any specific decisions.
From 1990 to 2022, SEFE operated under the name Gazprom Germania GmbH and was wholly owned by the Russian gas concern Gazprom. After the start of the Russian invasion of Ukraine in the spring of 2022, control of the company was transferred to the German Federal Network Agency, which acts as the energy regulator. In December last year, the company was nationalized and became the property of the German federal government.
In October, the European Union approved the 19th package of sanctions against Russia, which includes measures to completely stop importing Russian liquefied gas. According to the new regulations, all EU countries must stop purchasing Russian LNG by the end of 2026.
Before the start of the large-scale war in Ukraine, Russia accounted for about 45% of the European Union’s gas imports, but by 2024 this share had dropped to 19%. According to the European Commission’s plan, by the end of 2025, the figure should drop to 13%.
According to Reuters, between January and October of this year, Gazprom supplied 14.7 billion cubic meters of gas to European consumers through the Turkish Stream, which remains the only existing export route to the EU. This is 45% less than in the same period in 2024. If current volumes are maintained, the agency estimates that total Russian gas exports to Europe in 2025 could reach about 18 billion cubic meters, which would be the lowest level since the early 1970s, when the USSR first began supplying gas to Europe.
