The operator of the Polish section of the Yamal-Europe gas pipeline, EuRoPol GAZ, filed a lawsuit in arbitration at the Chamber of Commerce in Stockholm against Gazprom in the amount of PLN 6 billion (about $1.4 billion). This was announced on May 19 by Deputy Prime Minister, Minister for Control of State Assets of Poland Jacek Sasin on the radio station RMF24.
The official explained that EuRoPol GAZ filed a lawsuit to recover about PLN 850 million (approximately $220 million) of outstanding debt for gas transportation and compensation for more than PLN 5 billion ($1.2 billion) in “lost profits” due to the stoppage of gas transit.
The Yamal-Europe gas pipeline starts in Torzhok, passes through Belarus and Poland, and ends in Frankfurt an der Oder, Germany. Its construction began in 1994, and in 2006 the pipeline reached its design capacity of 32.9 billion cubic meters. m per year.
683 km of the pipeline out of 2,000 km pass through Poland, this section belongs to EuRoPol Gaz, 51.18% of which previously belonged to the Polish side, and 48.82% to Gazprom. But last November, Polish media reported that Warsaw had nationalized a stake in the Russian company.
Sasin noted that in 2010, the Polish authorities entered into a “unprofitable contract” with Gazprom in the expectation that the Russian company would supply gas through Yamal to Europe until 2045. “Unlike our predecessors, we have never stood in front of the Russians on my knees,” said Sasin. “And our predecessors, in some surprising way, agreed to the conditions that the Russians imposed on us, and did not see the need for diversification (gas supplies to Poland).”
Actual gas supplies via the Yamal-Europe pipeline stopped in December 2021 due to Gazprom’s refusal to reserve additional pumping capacities for December 21 at daily auctions. After that, the pipeline began a reverse pumping regime (from Germany to Poland), which led to an increase in gas prices in Europe to $1,850 per 1,000 cubic meters. m. The press secretary of the President of Russia Dmitry Peskov then said that the pumping was suspended “for commercial reasons.” After Poland added Gazprom to the sanctions list in April 2022, the Russian authorities imposed sanctions on EuRoPol GAZ. This means that Gazprom is prohibited from using the capacities of the Yamal-Europe pipeline, Sergey Kupriyanov, a representative of the Russian company, explained in turn in May 2022.
From April 1, 2022, the Russian Federation demanded that importers of Russian pipeline gas transfer payments for supplies into rubles. Many European companies, including those from Poland, refused to do this, after which Gazprom stopped supplying them with fuel.
As a result, companies from the EU began to file claims in arbitration in order to receive a penalty for non-fulfillment of the contract. The first lawsuit was filed by the Finnish Gasum, but in mid-November 2022, Gazprom announced that the arbitration in Stockholm ordered Gasum to pay Gazprom Export more than 300 million euros under the current gas supply contract. On November 30, Klaus-Dieter Maubach, CEO of the German energy company Uniper, said that the company had also filed a lawsuit with Stockholm demanding to recover from Gazprom Export losses in the amount of 11.6 billion euros for gas not delivered since June. In February 2023, international arbitration proceedings against Gazprom were initiated by the Czech CEZ due to gas shortages in 2022.
Pipeline gas exports from Russia in 2022 were under pressure for several reasons. In May last year, Ukraine stopped pumping Russian gas through one of the two compressor stations, which halved transit through the country (on May 19, Gazprom’s bid was 41.3 million cubic meters). Then, since June, deliveries through the Nord Stream 1 pipeline were reduced, and in September it and the still unlaunched Nord Stream 2 were seriously damaged as a result of sabotage. Now, deliveries of Russian pipeline gas to Europe continue in addition to transit through Ukraine via a branch from the Turkish Stream (pumping over the past day amounted to 26.5 million cubic meters). The total export of pipeline gas to Europe in 2022 almost halved compared to 2021 to 100.9 billion cubic meters. m, said at the end of last year, the chairman of the board of “Gazprom” Alexei Miller.
Strengthening anti-Russian sanctions and uncertainty in the market led to an increase in gas prices in Europe. At the beginning of March 2022, the cost of 1000 cubic meters. m of natural gas at the TTF hub in the Netherlands, according to the ICE exchange, broke a historical record, approaching $3,900. Then it gradually decreased, falling below $1,000 per 1,000 cubic meters by the end of the year. m. On May 19, June futures traded at $342 per 1,000 cubic meters. m.
The victory of EuRoPol GAZ in arbitration is doubtful, because Gazprom was unable to supply gas through the territory of Poland precisely because of the actions of the authorities of this country, which nationalized Gazprom’s share in the gas pipeline section, says Yury Fedyukin, managing partner of the law firm Enterprise Legal Solutions. Because of the nationalization, the Russian authorities took retaliatory measures, which led to the inability to pay for the reservation of pipeline capacity, he continues.
Fedyukin notes that even in the event of a court decision in favor of the Polish company, it will be problematic to recover the required amount. The property of Gazprom available for confiscation in the European Union (EU) has already been arrested or transferred to temporary management, he explains. According to the lawyer, Gazprom will file objections and, if necessary, file appeals, which are likely to be satisfied, since the execution of contracts is complicated by anti-Russian sanctions.
Pen & Paper Senior Partner Anton Imennov recalled that the Stockholm Arbitration Court, when considering the Gasum claim, recognized the decree of the President of Russia on the transfer of payment for gas supplies to rubles as force majeure. “With this in mind, the tribunal confirmed the legitimacy of suspending gas supplies if the buyer fails to pay in rubles,” he added. According to Imennov, Gazprom can use this conclusion in the proceedings with the Polish company.
From the point of view of energy security, Poland has already adapted to the lack of gas supplies from Russia, says Sergei Kaufman, an analyst at FG Finam. Poland increased imports of liquefied natural gas (LNG) last year and also took advantage of the launch of the Baltic Pipe gas pipeline, he explains. The analyst adds that in 2021, almost 27 billion cubic meters were delivered via the Yamal-Europe pipeline. m of gas, and small volumes of supplies were exported intermittently until the end of April 2022. Kaufman also notes that “it is difficult to imagine a scenario in which a Polish company could actually receive funds from Gazprom.
