Advertisement
UK markets close in 1 hour 42 minutes
  • FTSE 100

    8,187.99
    -64.92 (-0.79%)
     
  • FTSE 250

    21,110.07
    -92.82 (-0.44%)
     
  • AIM

    784.89
    -1.28 (-0.16%)
     
  • GBP/EUR

    1.1900
    -0.0003 (-0.03%)
     
  • GBP/USD

    1.2987
    -0.0003 (-0.02%)
     
  • Bitcoin GBP

    48,392.25
    +2,464.50 (+5.37%)
     
  • CMC Crypto 200

    1,305.80
    +36.85 (+2.90%)
     
  • S&P 500

    5,638.00
    +22.65 (+0.40%)
     
  • DOW

    40,180.05
    +179.15 (+0.45%)
     
  • CRUDE OIL

    81.73
    -0.48 (-0.58%)
     
  • GOLD FUTURES

    2,419.10
    -1.60 (-0.07%)
     
  • NIKKEI 225

    41,190.68
    -1,033.32 (-2.45%)
     
  • HANG SENG

    18,015.94
    -277.44 (-1.52%)
     
  • DAX

    18,607.48
    -140.70 (-0.75%)
     
  • CAC 40

    7,639.40
    -84.92 (-1.10%)
     

Putin’s Gazprom ordered to pay €13bn to German energy giant

Uniper
Uniper

Russian energy giant Gazprom has been ordered to pay €13bn (£11bn) to Germany’s Uniper after it failed to fulfil gas orders since the war in Ukraine.

The ruling was announced by Uniper on Wednesday, allowing the business to formally sever long-standing ties with Gazprom.

It brings an end to the dispute between Gazprom and Uniper, as the latter was largely reliant on Russian gas until supplies were disrupted in the wake of Vladimir Putin’s invasion two years ago.

The business was only saved thanks to an €8bn bailout by the German government in September 2022, which led to it being nationalised.

Uniper is a power generator with assets across Europe, including in the UK where it is responsible for 7pc of the country’s electricity.

ADVERTISEMENT

The €13bn award stems from an arbitration hearing earlier this month, during which Gazprom was accused of breaching gas supply contracts.

European gas prices rose by 2.6pc following the decision, as energy traders signalled fears of disruption to Russian deliveries of gas elsewhere in Europe.

In a statement on Wednesday, Uniper said: “Uniper decided today to terminate its long-term Russian gas supply contracts and thus legally ended the long-term gas supply relationship with the Russian state-owned company Gazprom Export.

“The decision was made possible after an arbitration tribunal awarded Uniper the right to terminate the contracts and awarded it an amount of more than €13bn in damages for the gas volumes not supplied by Gazprom Export since mid-2022.”

Since both companies are owned by their respective governments, some have seen the legal battle as more than a traditional corporate dispute.

However, there are doubts as to whether Putin will ever allow Gazprom to pay the money owed to Uniper – especially as it would be passed to the German federal government.

Michael Lewis, the Briton last year appointed as Uniper’s chief executive, said: “This ruling provides legal clarity for Uniper.

“With the right of termination that we received in the arbitration ruling, we are ending the contracts with Gazprom Export. Uniper’s legal position was also confirmed on the issue of damages. Any amounts would flow to the German federal government.

“From today’s perspective, it is not yet clear whether significant amounts are to be expected.”

Uniper operates roughly 22.5 gigawatts of generation capacity across Germany, Holland, Sweden and Hungary, making it one of the world’s largest power producers.

Well over half its generation comes from gas and coal, although Uniper has pledged to become carbon neutral by 2040.

Its assets include Ratcliffe-on-Soar, Britain’s last coal-fired power station, sited just south of Nottingham.

The station is expected to close in September, finally ending the UK’s reliance on burning coal – the dirtiest of fossil fuels – to generate electricity.

Ratcliffe-on-Soar's closure marks the end of the UK's reliance on burning coal
Ratcliffe-on-Soar's closure marks the end of the UK's reliance on burning coal - Andrew Fox

They also own a large but ageing power station at Connah’s Quay in North Wales and another of similar size on the Isle of Grain in Kent.

Mr Lewis said Russia’s attack on Ukraine and consequent cuts in gas supplies to Europe, had forced Uniper to seek gas on global markets at inflated prices – prompting the company’s state bailout.

He said: “Our termination of the contracts with Gazprom Export is the latest in a series of consistent decisions over the last three years.

“During this time, Uniper has written off its share in the financing of the Nordstream 2 pipeline, its stake in the Russian subsidiary Unipro and allowed its coal supply contracts with Russia to expire.

“Since then, Uniper has worked hard to diversify its gas business and is now well positioned with its global LNG portfolio and pipeline gas supplies from various regions.”