Uniper Ends Contracts for Russian Gas Supply

On June 12, 2024, Uniper decided to terminate its long-term Russian gas supply contracts, thereby legally ending its relationship with the Russian state-owned company Gazprom Export. This decision followed a June 7 arbitration tribunal ruling that granted Uniper the right to terminate the contracts and awarded it over €13 billion in damages for the gas volumes not supplied by Gazprom Export since mid-2022. Despite the limited gas deliveries since June 2022 and the complete halt of deliveries since the end of August 2022, the long-term contracts between the two companies had remained legally binding, with some extending into the mid-2030s.

Following significant losses resulting from restrictions on Russian gas supply, Uniper initiated arbitration proceedings against Gazprom Export by the end of 2022. The use of arbitration as a method for dispute resolution was stipulated in their contract and had been utilized by both parties for previous disputes. Seated in Stockholm, the arbitration tribunal ruled under Swiss law. The tribunal's decision is legally binding and conclusive.

"This ruling brings legal certainty for Uniper. With the termination right granted in the arbitration decision, we are terminating our contracts with Gazprom Export," said Michael Lewis, CEO of Uniper. "The tribunal also affirmed our position regarding damages, with any awarded amounts intended for the German federal government. It remains uncertain at this point whether substantial sums will materialize."

Uniper inherited and continued these contracts from its predecessor companies upon its establishment in 2016. Dating back to the 1970s, these agreements have been central to the German-Russian energy partnership. Starting in June 2022, Gazprom Export initially reduced and eventually halted natural gas supplies to Germany, despite such actions not being sanctioned by the EU to this day. As a result, Uniper had to secure gas for its customers through alternative means, often at significantly elevated market prices, resulting in additional costs for Uniper amounting to hundreds of millions of euros per day at times. These expenses were only manageable with government support. Uniper's financial stability was restored through a stabilization agreement in December 2022, accompanied by the federal government becoming the primary shareholder in Uniper.

"Our decision to terminate contracts with Gazprom Export is the culmination of a series of strategic actions taken over the past three years," explained Michael Lewis, CEO of Uniper. "During this period, Uniper has written off its investment in the Nord Stream 2 pipeline financing, divested its stake in the Russian subsidiary Unipro, and allowed its coal supply contracts with Russia to lapse. Since that time, Uniper has concentrated on broadening its gas operations, building a strong global LNG portfolio, and ensuring pipeline gas supplies from various regions.”