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GAIL Settles USD 1.8 Billion Arbitration Case with Former Gazprom Unit for USD 285 Million

The dispute arose after GAIL initiated legal action in December 2023, accusing SEFE of failing to deliver liquefied natural gas (LNG) under a long-term contract. GAIL had sought compensation for SEFE’s default on LNG deliveries, which were part of an agreement signed in 2012 for the purchase of 2.85 million metric tonnes of LNG annually from Gazprom over 20 years.
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GAIL (India) Ltd, a Maharatna public sector undertaking, has reached a settlement in its arbitration case against SEFE Marketing & Trading Singapore Pte Ltd, a former unit of Russian energy company Gazprom. The settlement amount is USD 285 million, a fraction of the original claim of USD 1.817 billion. The agreement also includes the withdrawal of the arbitration proceedings filed with the London Court of International Arbitration.

The dispute arose after GAIL initiated legal action in December 2023, accusing SEFE of failing to deliver liquefied natural gas (LNG) under a long-term contract. GAIL had sought compensation for SEFE’s default on LNG deliveries, which were part of an agreement signed in 2012 for the purchase of 2.85 million metric tonnes of LNG annually from Gazprom over 20 years. This deal was initially made with Gazprom Marketing and Trading Singapore, a unit of Gazprom Germania, which later became Sefe after its parent company divested ownership following sanctions imposed on Russia over its invasion of Ukraine in 2022.

The conflict escalated when, amid a surge in global LNG prices in June 2022, SEFE ceased LNG supplies to GAIL to prioritise its own demand. Supplies were resumed in March 2023, but GAIL sought damages for the period of non-supply. While GAIL has not disclosed specific reasons for the settlement amount, the resolution has brought the arbitration proceedings to a close.


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