Translated material
Echo of the gas war
Slovak SPP demands compensation from Gazprom in international arbitration in Paris
Dmitry Medvedev's state visit to France was marked by an international gas scandal. At that moment, when the heads of Gazprom and GDF Suez, Alexey Miller and Gerard Mestrallet, in the presence of the leaders of the two countries, Dmitry Medvedev and Nicolas Sarkozy, signed a memorandum of cooperation, the purchase of an additional 2.5 billion cubic meters of gas from 2015 and the accession of the French concern to the project “ Nord Stream (the deal should be completed by the end of March), Interfax, citing an anonymous source, reported that the Slovak gas monopolist SPP filed a lawsuit against Gazprom Export with the Arbitration Court of the International Chamber of Commerce in Paris, demanding compensation for losses from the Russian-Ukrainian gas war 2009.The fact is that GDF Suez, together with the German E.ON Ruhrgas, own the Slovak company and, under a privatization agreement, manage it. Moreover, the head of the management directorate is now, according to rotation, a protege of the French company, Jean-Jacques Syarzynski; last summer he replaced the German Bernd Wagner.
There is no exact data on the size of the claims, but the claim itself was filed back in December. Both Gazprom Export and SPP say they are holding negotiations, but it is too early to comment. Mr. Miller yesterday refused to answer a question from a Vremya Novostey correspondent about the Slovak lawsuit.
For 14 days at the beginning of last year, during which the transit of Russian gas through Ukraine was stopped, SPP lost about 400 million cubic meters of gas. Emergency supplies to consumers were carried out using our own reserves in storage facilities and emergency supplies from foreign shareholders. GDF Suez and E.ON Ruhrgas provided from 7 to 11 million cubic meters per day. In the last days of the crisis, the German-owned Czech RWE Transgas got involved. The total volume of external purchases thus did not exceed 100 million cubic meters of gas.
The next meeting of the group of Gazprom and SPP negotiators will take place next week. The international arbitration process is lengthy and expensive for both parties, and the likelihood of pre-trial settlement is still high.
Perhaps the fact that the situation surfaced just yesterday, on the day of Mr. Medvedev's visit to Paris, is a mere coincidence. But there are already many strange things in the situation. Slovakia, along with Bulgaria and Moldova, turned out to be the most vulnerable consumers of Russian gas. They had almost no alternative emergency supply options. Sofia was the first to calculate its damages in the amount of 86 million euros, but in the end it was never presented. Gas does not enter the country directly, but through intermediaries - the Bulgarian Overgas Inc. and the German WIEE. In addition, Gazprom declared force majeure due to the illegal actions of the transit company.
Slovakia, on the contrary, was quite restrained in relation to Moscow in official statements. Prime Minister Robert Fico was one of the few European politicians to officially support Russia and blame Ukraine for the supply disruption. In exchange, he offered the Russian partners to change the gas supply scheme to Slovakia. In particular, to create a joint venture that would have the opportunity to sell gas on the Slovak market independently (bypassing SPP) or would receive the functions of an intermediary between Gazprom Export and SPP.
In November, Vladimir Putin, after a meeting with Robert Fico, said that “there are no obstacles” to creating a joint venture, and Alexey Miller promised to “immediately begin consultations” on this issue. In this context, the December lawsuit from SPP can be seen as an attempt to protect its monopoly position in the gas market.
As you know, at the end of 2008, Gazprom Export and the Slovak company signed a 20-year contract for the supply of 6.5 billion cubic meters of gas per year. Last year, SPP, apparently, was unable to fulfill its minimum gas withdrawal obligations under the contract: Russian gas imports amounted to 5.4 billion cubic meters (83% of contract volumes).
At the same time, Mr. Fico, having already become prime minister, showed himself to be an opponent of the privatization of SPP, spoke about the damage caused to the state during the sale of shares, threatened nationalization and limited domestic gas prices. In mid-February, he accused (and showed documents on television) the ex-prime minister and leader of the opposition Christian Democratic party, Michalus Dzurinda, of withdrawing several hundred million euros received from buyers of privatized assets, including SPP, to accounts in other countries. Now in Slovakia the next parliamentary election campaign is in full swing (voting will take place in June), and the gas factor, apparently, will be used by both camps. And the sympathies of SPP shareholders in this case are entirely on the side of the former head of government.
On the other hand, throughout last year Gazprom negotiated with the largest gas consumers, who, due to the crisis drop in demand and lower prices on the spot market, were unable to fulfill their contractual obligations to take gas. As a result of negotiations with E.ON Rurgas (GDF Suez was not among the violators), an agreement was signed to resolve the situation, pay fines and change the parameters of contracts. In particular, Gazprom agreed to reduce the take-or-pay level and sell gas above the minimum at spot prices. It is not clear how the parties avoided the issue of SPP claims in the package deal. In this regard, a lot of questions arise for Russian negotiators.
And the lawsuit from the Slovaks looks completely ridiculous at a time when Russian-French gas friendship is on the rise, when GDF Suez already has one foot in Nord Stream and turned out to be the first European partner who, during a period of falling demand for Russian gas in Europe, announced its intention to increase contractual volumes by 11% since 2015. It is clear that a legally non-binding document was signed yesterday. And to turn it into a commercial contract, the parties still have to negotiate a fair amount, but since the beginning of the crisis, other Gazprom partners have not dared to openly declare their interest in additional volumes.
It should also be noted that GDF Suez will have to hurry up with the completion of the Nord Stream deal. The memorandum states that the purchase of a 9% stake (4.5% each from E.ON Ruhrgas and Wintershall) should take place before the start of construction of the gas pipeline. The start is officially set for April. The head of E.ON Ruhrgas, Bernhard Reutersberg, said last week that the terms of the deal were close to being agreed upon.
GDF Suez has several contracts to purchase 10.5 billion cubic meters of Russian gas now and 2.5 billion cubic meters via the new route through the Baltic, starting in 2011. Gazprom has the ability to sell up to 1.5 billion cubic meters of gas to customers on the French market (GDF Suez guaranteed the provision of capacity for such transactions). Last year, the total volume of Russian gas supplies to France amounted to 10.3 billion cubic meters.