- Russia’s Gazprom has tried to claim “force majeure” — or an act of God — in its natural gas contracts with European buyers.
- Force majeure clauses allow parties to be released from their obligations due to extreme or unforeseen circumstances.
- The move has sparked fears Russia may halt exports to Europe, and comes as its gas supplies to China are at record highs.
Russia’s Gazprom has tried to trigger an “act of God” clause in its natural-gas contracts with European buyers, arguing that it should not be held responsible for recent or current drops in supplies.
Analysts said the move raises questions about whether Russia is planning to permanently reduce or even halt flows of the vital fossil fuel to Europe, in what could be a huge blow for the region’s economy.
It comes as Gazprom’s natural gas exports to China through the Power of Siberia pipeline hit a record high, in a sign of Russia’s pivot away from Europe and toward Asia.
Gazprom declared “force majeure” — which means act of God — in a letter sent to customers dated July 14, Reuters reported Monday. The letter said the declaration applied retrospectively to supplies from June 14.
Force majeure is a legal clause that allows parties to be released from their obligations in contracts due to extreme or unforeseen circumstances.
German energy giant Uniper told Insider it had received a letter from Gazprom in which the Russian company claimed force majeure retroactively for past and current shortfalls in gas deliveries.
“We consider this as unjustified and have formally rejected the force majeure claim,” a Uniper spokesperson said.
Another German energy company, RWE, told Insider it had also received a force majeure letter from Gazprom. Gazprom did not respond to a request for comment.
Russia has cut its supplies of natural gas to Europe in recent months as tensions have grown over the Ukraine conflict and resulting Western sanctions. Moscow has blamed sanctions for delaying the export of a turbine from Canada, which it says has caused reduced flows through the Nord Stream 1 pipeline.
However, many analysts have said the supply reduction is likely politically motivated, pointing out that Russia has not made up the shortfall through other routes.
Analysts warned that Gazprom’s move could be a sign that Russia is planning not to restart natural gas exports through the Nord Stream 1 pipeline. It is currently closed for maintenance work and is scheduled to reopen Thursday, though the European Union doesn’t expect that to happen, the Wall Street Journal reported.
Record exports to China
As fears over a European gas squeeze rose, Gazprom said Monday it had exported a record amount of the fossil fuel to China through the Power of Siberia pipeline. Gazprom said the exports were carried out under a long-term contract with China’s CNPC.
Russia’s natural gas exports to China have been steadily increasing since 2019. President Vladimir Putin visited Beijing in February and struck new oil and gas deals with China, in a sign of the Kremlin’s increasingly close economic and political links with the country.
Both China and India have stepped up their imports of oil from Russia, with the Kremlin looking for new sources of revenue as Europe tries to cut back on its purchases.
Gas flow restart
Ole Hansen, chief commodities strategist at Saxo Bank, said he thinks natural gas flows to Europe through Nord Stream 1 will start up again, albeit at reduced levels.
“One development that supports the worst-case scenario of no gas has been Russia’s refusal to book additional capacity on other pipelines, especially through Ukraine, while NS1 underwent maintenance,” he said.
However, he added: “The force majeure really relates to the June reduction triggered by the missing turbine, so in my opinion it should not prevent a restart on Thursday at the 40% capacity level seen before maintenance started.”
Hansen said that anything less than that would be due to a political decision to squeeze the European economy even harder in retaliation for the support provided to Ukraine.
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