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Gazprom to European Buyers: Gas Supply Halt Beyond Control - Reuters

Gazprom to European Buyers: Gas Supply Halt Beyond Control - Reuters
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By Staff, Agencies

Russia’s Gazprom has told customers in Europe that it cannot guarantee gas supplies because of “extraordinary” circumstances, according to a letter seen by the Reuters news agency, upping the ante in an economic tit-for-tat with the West over Moscow’s invasion of Ukraine.

The Russian state gas monopoly said in a letter dated July 14 that it was retroactively declaring force majeure on supplies from June 14. The news comes as Nord Stream 1 [NS1], the key pipeline delivering Russian gas to Germany and beyond, is undergoing 10 days of annual maintenance scheduled to conclude on Thursday.

The letter added to fears in Europe that Moscow may not restart the pipeline at the end of the maintenance period in retaliation for sanctions imposed on Russia over the war in Ukraine, heightening an energy crisis that risks tipping the region into recession.

Force majeure is standard in business contracts and defines extreme circumstances that release a party from their legal obligations. The declaration does not necessarily mean that Gazprom will stop deliveries, rather that it should not be held responsible if it fails to meet contract terms.

Gazprom did not respond to a request for comment, Reuters reported.

Russian gas supplies have been declining via major routes for some months, including via Ukraine and Belarus as well as through the Nord Stream 1 pipeline under the Baltic Sea.

A trading source, asking not to be identified because of the sensitivity of the issue, said the force majeure concerned supplies through Nord Stream 1.

“This sounds like a first hint that the gas supplies via NS1 will possibly not resume after the 10-day maintenance has ended,” said Hans van Cleef, senior energy economist at ABN Amro.

“Depending on what ‘extraordinary’ circumstances have in mind in order to declare the force majeure, and whether these issues are technical or more political, it could mean the next step in escalation between Russia and Europe/Germany,” he added.

Uniper, Germany’s biggest importer of Russian gas, was among the customers that said it had received a letter, and that it had formally rejected the claim as unjustified.

RWE, Germany’s largest power producer and another importer of Russian gas, also said it has received a force majeure notice.

Gazprom cut NS1 capacity to 40 percent on June 14, the date that Gazprom said in the letter to buyers would be the start of the force majeure.

Gazprom blamed sanctions for that reduction, citing the delay in the return of a gas turbine from maintenance in Canada by equipment supplier Siemens Energy.