Europe's benchmark natural gas prices jumped by 3% on Wednesday morning after German energy giant Uniper terminated its Russian gas supply contracts, leaving the market concerned about the remaining flows of gas from Russia to Europe.
Uniper said today it had decided 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 last week awarded Uniper the right to terminate the contracts and awarded it more than $14 billion (13 billion euros) in damages for the gas volumes that Gazprom Export has not supplied since the middle of 2022.
"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," said Uniper's CEO Michael Lewis.
"Uniper's legal position was also confirmed on the issue of damages."
Germany had to nationalize Uniper in 2022 to avoid its collapse amid soaring gas prices and a lack of Russian supply in the wake of the Ukraine invasion and the EU sanction barrage. The total bill for the nationalization came in at $53 billion.
Last month, Uniper appealed an injunction by a Russian court that says that the German energy giant needs to pay as much as $15 billion (14 billion euros) if it seeks to continue arbitration against Gazprom, which was Uniper's main natural gas provider before the Russian invasion of Ukraine.
Today's announcement from Uniper and the recent warning from OMV that Gazprom could halt gas supply to Austria due to a foreign court ruling that could interrupt OMV payments to Gazprom Export, rekindled concerns in the European gas market about whether Russian supply would be further limited by Gazprom.
As a result, Dutch TTF Natural Gas Futures, the benchmark for Europe's gas trading, jumped by 3% at $38 (35.315 euros) per megawatt-hour (MWh) as of 11:19 a.m. in Amsterdam.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More