“We have filed for arbitration in London and are seeking damages,” he said. He didn’t specify how much the company wants. “But definitely there has been some damages because of this non-supply,” Gupta told ET.
GAIL reported a 77.5% slump in its March quarter net profit after high gas prices and supply disruption from Russia impacted earnings. “Gazprom alleged force majeure, which we did not accept, as this was a portfolio contract and they should have sourced (LNG) cargoes from other geographies and supplied the same,” Gupta said.
Though LNG supplies have resumed and GAIL is now getting the full quantity as per the contract, it’s decided to take up the case legally against Gazprom, he said. “We have nominated our arbitrator. We are pressing for specific performance (of the contract) and to claim damages,” Gupta said.
40 Cargoes/Annum had to be Sent
GAIL entered into a 20-year deal with GMTS in 2012 for annual supply of an average 2.5 million tonnes of LNG. GMTS was a unit of Gazprom Germania, now renamed Sefe. However, Gazprom Germania gave up GMTS ownership after sanctions were imposed on Moscow for invading Ukraine last February.
The Russia-Ukraine war sent LNG prices soaring and created a shortage of the fuel. GAIL tried to mitigate the shortfall of gas by cutting down supplies to fertiliser and power plants and also reducing utilisation of its own Pata petrochemical plant in Uttar Pradesh to 40%.GMTS was to supply 40 cargoes per annum to GAIL.
Of this, only 16 cargoes were supplied, said GAIL officials. According to industry estimates, the 24 cargoes could be valued at over ₹8,000-10,000 crore.
Gupta said GAIL has been receiving the contracted quantity for the past two months. It expects these volumes to continue going forward.
GAIL ended at ₹104.85, down 1.3%, on the BSE Friday. The benchmark Sensex ended 0.48% higher.
