German state-owned company ordered to terminate Russian LNG supply contract
Illustrative photo: German company must stop purchasing Russian LNG (Getty Images)
Germany’s Ministry of Economic Affairs is demanding that the German company SEFE, a former subsidiary of Gazprom, terminate its contract for the supply of Russian LNG, states the German Ministry of Economic Affairs, according to Bloomberg.
The ministry indicated that SEFE can terminate its Russian LNG supply contract by declaring force majeure. This legal provision, which allows companies to be released from contractual obligations, could be applied in light of the latest EU sanctions against Moscow and the bloc’s plan to phase out Russian LNG.
LNG supply contract scandal
SEFE, officially Securing Energy for Europe GmbH, has already faced criticism for adhering to a long-term LNG supply contract from the Yamal plant in Siberia.
According to preliminary estimates, the cost of terminating the contract could be around €10 billion ($11.6 billion).
Last month, the company said it would assess the impact of the latest sanctions on the contract, but has not taken any action so far.
Germany’s Ministry of Economic Affairs states that the import agreement provides for the delivery of 2.9 million tons of LNG per year and runs until 2040, with no option for early termination.
LNG import ban
A few weeks ago, the European Union introduced its 19th sanctions package against Russia.
The restrictions include a complete ban on the purchase of Russian liquefied natural gas.
Now, all EU countries are required to stop importing Russian LNG by the end of 2026.
