EXCLUSIVE Russia's Gazprom tells Europe gas halt beyond its control
Last edited Mon Jul 18, 2022, 12:02 PM - Edit history (3)
Source: Reuters
LONDON, July 18 (Reuters) - Russia's Gazprom has told customers in Europe it cannot guarantee gas supplies because of 'extraordinary' circumstances, according to a letter seen by Reuters, upping the ante in an economic tit-for-tat with the West over Moscow's invasion of Ukraine.
Dated July 14, the letter from the Russian state gas monopoly, said it was declaring force majeure on supplies, starting from June 14. Known as an 'act of God' clause, force majeure is standard in business contracts and spells out extreme circumstances that excuse a party from their legal obligations. Gazprom's (GAZP.MM) had no immediate comment on the force majeure.
Uniper, Germany's biggest importer of Russian gas, was among the customers who said they had received a letter, and that it had formally rejected the claim as unjustified. It did not share the letter, but a trading source, asking not to be identified because of the sensitivity of the issue, said the force majeure concerned supplies through the Nord Stream 1 pipeline, a major supply route to Germany and beyond.
Flows through the pipeline are at zero as the link undergoes annual maintenance that began on July 11 and is meant to conclude on Thursday. Europe fears Moscow could keep the pipeline mothballed in retaliation for sanctions imposed on Russia over the war in Ukraine, heightening an energy crisis that risks tipping the region in recession.
Read more: https://www.reuters.com/business/energy/russias-gazprom-declares-force-majeure-gas-supplies-europe-2022-07-18/
Breaking. Original was a short article. Now updated again.
Previous update and headline -
LONDON, July 18 (Reuters) - Russia's Gazprom (GAZP.MM) has declared force majeure on gas supplies to Europe to at least one major customer, according to the letter from Gazprom dated July 14 and seen by Reuters on Monday.
The letter said Gazprom, which has a monopoly on Russian gas exports by pipeline, could not fulfil its supply obligations owing to "extraordinary" circumstances outside its control. It said the force majeure measure, a clause invoked when a business is hit by something beyond its control, was effective from deliveries starting from June 14.
A trading source said the letter concerned supplies through the Nord Stream 1 pipeline, a major supply route to Germany and beyond. Gazprom had no immediate comment.
The measure will likely escalate tensions between Russia and the West over the Russian invasion of Ukraine, action Moscow calls a "special military operation". The European Union, which has imposed sanctions on Moscow, aims to stop using Russian fossil fuels by 2027 but wants to supplies to continue for now as it shifts away from Russian supplies.
Original article and previous headline -
LONDON, July 18 (Reuters) - Russian gas export monopoly Gazprom (GAZP.MM) has declared force majeure on gas supplies to Europe to at least one major customer starting June 14, according to the letter seen by Reuters.
The letter said Gazprom could not fulfil its supply obligations owing to "extraordinary" circumstances outside its control.
A trading source said the letter concerned supplies to Germany through the the Nord Stream 1 pipeline.
Farmer-Rick
(10,216 posts)The idiots who thought up "free" trade, globalization, trickle down and supply side economics never addressed weaponizing strategic supplies.
You really think it's a good idea to import your strategic supplies from another country? Did any of these award winning "free" trader economists consider how easily trade could be used to hurt a population? Has there ever been a war that didn't involve restricting supplies to force the population to succumb?
The United States is just as exposed to weaponized strategic supply cutoffs as Europe is. Look at how COVID affected the supply rubberband and shortages here in the US.
This was inevitable and most (not all) economists sat back and cheered it on.
The first thing you destroy when attacking a country is their supply chain.
Ford_Prefect
(7,925 posts)Mafia Style pressure from Putin's thugs.
Just when the EU electric grid is about to be hit with major heat wave usage.
Imagine...
BumRushDaShow
(129,662 posts)and I remember last month Germany was saying they believed they had enough stored at that point but not for long.
Ford_Prefect
(7,925 posts)The line being presently down for maintenance(if you believe that) has nothing to do with it. Gazprom is trying to pretend it has legitimate problems when it runs or doesn't according to the whims of Vlad. Declaring force majeure invokes legal protection from suits regarding delivery of service.
This is nothing less than nationalized terrorism.
Bloomberg news put it this way:
Russia Snubs Gas Transit Bookings, Keeping Buyers Guessing on Supplies.
Meanwhile Gazprom is selling ever more gas to China.
BumRushDaShow
(129,662 posts)but it is unfortunate to be in one of those "single points of failure" situations and this is a big one.
From Bloomberg -
By Elena Mazneva
July 18, 2022, 6:08 AM EDT
Moscow again rejected additional gas-pipeline space offered by Ukraine, keeping European buyers guessing as future flows on the key Nord Stream route also remain uncertain. At a monthly auction on Monday, Russias Gazprom PJSC opted not to book extra capacity to ship gas to Europe via Ukrainian pipelines in August. That keeps deliveries to the continent tight, just as concern grows that the Nord Stream link may not fully return when maintenance ends later this week.
Russias squeeze on gas supplies has unsettled the market, with European benchmark futures more than doubling in value this year. Last week, Germany started to withdraw gas from stockpiles that it had been building up for winter, while Hungary declared an energy state of emergency.
Ukraine has on numerous occasions called for Gazprom to increase flows via the Sudzha cross-border point to add supply to Europe -- an option Russia has rejected for weeks. A second border point, Sokhranovka, was put out of service in May amid fighting in eastern Ukraine. Making matters worse, another key back-up route -- the Yamal-Europe pipeline running through Belarus and Poland -- is no longer an option after Moscow sanctioned the owner of the Polish section of the link in May.
To be sure, Gazprom can still book extra space on Ukrainian pipelines at daily auctions, though such a move is unusual. The Russian company can supply 77.2 million cubic meters of gas a day via Sudzha under its transit contract with Ukraine, but has kept flows at about 42 million for weeks. If it had sent contracted flows in full, and added the 15 million cubic meters on offer in Mondays auction, the total volume would have equated to about 30% of peak Nord Stream capacity.
(snip)
https://www.bloomberg.com/news/articles/2022-07-18/russia-turns-the-screws-on-gas-market-snubbing-transit-bookings
Although alternately, in the case of oi vs LNG, OPEC is not very happy at Russia undercutting the oil price not at losing their biggest customers which were not just China, but now India, that has systematically shifted contracts to Russia for bargain basement prices, and has been leaving the ME (notably Saudi) high and dry!
2naSalit
(86,843 posts)This pariah, it does not meet the criteria for this declaration.
Force majeure (lit. superior force, with the sense of overwhelming force, from French[1][2]) is a common clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or sudden legal changes prevents one or both parties from fulfilling their obligations under the contract. Explicitly excluded is any event described as an act of God, which covers a separate domain and legally differs, yet it is still related to contract law. In practice, most force majeure clauses do not excuse a party's non-performance entirely but only suspend it for the duration of the force majeure.[3]
Force majeure is generally intended to include occurrences beyond the reasonable control of a party, and therefore would not cover:
Any result of the negligence or malfeasance of a party, which has a materially adverse effect on the ability of such party to perform its obligations.[4]
Any result of the usual and natural consequences of external forces.
To illuminate this distinction, take the example of an outdoor public event abruptly called off.
---snip---
https://en.wikipedia.org/wiki/Force_majeure
Since pooptin created a war of choice, none of this should apply. Not that it matters to him.
PortTack
(32,809 posts)truthisfreedom
(23,159 posts)That the oil companies in the US employ their idle leases to supply oil to Europe via tankers. This would increase supply in the US as well, bringing down prices.
BumRushDaShow
(129,662 posts)There have been a number that have either closed down or are undergoing maintenance.
I think we are at a point of not so much an "oil supply" issue (we are still pumping 1 million bbl/day out of the Strategic Oil Reserve) but now a gasoline issue (at least here in the U.S.).
rockfordfile
(8,708 posts)Clearly some people in those countries and in our own sold out to Russia.