Former Gazprom subsidiary to pay Gail India $285 million in settlement

Gazprom Germania (now SEFE) had suspended LNG shipments to Gail after being taken over by European authorities

State-owned gas utility Gail (India) Ltd announced on Wednesday that it has reached a legal settlement with a former subsidiary of Russian energy giant Gazprom, resolving pending arbitration proceedings.

 

As part of the settlement, SEFE Marketing & Trading Singapore Pte Ltd will pay $285 million to GAIL, with the arbitration proceedings before the London Court of International Arbitration being withdrawn.

 

The entity involved is a subsidiary of Germany’s SEFE Securing Energy for Europe GmbH. "The terms of the settlement agreement include payment of $285 million by SEFE Marketing & Trading Singapore Pte Ltd to Gail (India) Ltd and withdrawal of arbitration proceedings before the London Court of International Arbitration," Gail stated in a regulatory filing.

 

 

In December 2023, Gail had filed an arbitration claim seeking $1.8 billion for the non-supply of LNG cargoes under a long-term contract. The claim included compensation for non-supplied volumes and associated losses.

 

Gazprom dispute

 

The dispute originated from supply disruptions by Russian energy giant Gazprom. In 2012, Gazprom Marketing and Trading Singapore (GMTS) signed a 20-year agreement to supply Gail with 2.85 million tonnes of LNG annually. Supplies under the contract began in 2018, with full volumes expected by 2023.

 

However, in 2022, GMTS was brought under Gazprom Germania GmbH, after which Gazprom relinquished ownership without explanation and imposed sanctions. Amid the Ukraine conflict, Germany seized control of Gazprom Germania in April 2022.

 

Germany's federal energy regulator, the Federal Networks Agency, assumed temporary trusteeship of the company and renamed it SEFE. Following this, SEFE was barred from picking up cargo from Russia, resulting in the dispute with Gail.