New Delhi: Maharatna PSU GAIL (India) Ltd has settled a USD 1.817-billion arbitration case against a former unit of Russian energy giant Gazprom, Sefe Marketing & Trading Singapore Pte Ltd, for USD 285 million, the PSU said in a regulatory filing to the stock exchanges. "The terms of the Settlement Agreement include payment of USD 285 million by SEFE Marketing & Trading Singapore Pte Ltd to GAIL (India) Limited and withdrawal of arbitration proceedings before London Court of International Arbitration," said the stock exchange filing.
In December 2023, GAIL had initiated legal proceedings against SEFE Marketing & Trading Singapore Pte Ltd in the London Court of International Arbitration for its failure to deliver Liquefied Natural Gas (LNG) under a long-term contract. It had sought USD 1.817 billion in compensation for the default in delivery of the committed cargoes by SEFE.
The long-term deal was signed in 2012 and was valid for 20 years for the purchase of 2.85 million tonnes per annum of LNG from Russian energy giant Gazprom. The deal was signed with Gazprom Marketing and Singapore (GMTS), which at the time was a unit of Gazprom Germania, now called Sefe. The Russian parent gave up ownership of Sefe after Western sanctions were imposed on Moscow over its invasion of Ukraine in 2022.
At a time when global prices of LNG shot up to record highs in June 2022, SEFE had stopped supplying LNG to GAIL to meet its own demand. The supplies were resumed in March 2023. GAIL sought damages for the period during which LNG was not supplied to the company.
GAIL did not divulge any details of the deal or why it settled the case for USD 285 million.