Russia’s invasion of Ukraine has been a huge headache for dozens of countries. western energy companieswho had to choose between stay in russia the risks this entails to your brand’s reputation or abandon your investments on the go In one of the countries with the largest fossil fuel reserves in the world, billions of dollars in losses are often assumed. The conditions of each company were decisive. But what is clear in this case, European gas companiesthe point is Brussels It didn’t make it any easier. On the one hand, it did not give up its calls to cut imports, on the other hand it resisted. sanction russian gas. a situation leaving energetic Without “force majeure” to withdraw from their contracts, this could translate into multi-million dollar fines.
In recent months, several gas companies exit Russia—not necessarily complete—or not accomplished break their contract, but many of them are still in the country. “Some left because they were under greater pressure. social pressure, but they paid a very high price in terms of both their profits and the value of their assets,” says Baker Institute analyst, Anna Mikulska.
Contracts of Spanish energy companies
This much reply like improvisation keep active Business relationships The deal they entered into with Russian gas companies before the Kremlin attacked Ukraine. First, the 15-year contract Novatek get a ton liquefied natural gas (LNG) year. Repsol argues that this gas does not come from where. Russiabut it did so from the United States last year, and Novatek would also buy it to supply its customers.
In the case of Naturgy, which was signed long before the invasion, its contract is valid until 2041 and plans to import some of it into Spain. 3 trillion cubic meters The annual LNG volume represented 14% of Naturgy’s global supply last year, according to its annual report. “Contract some conformity clausesand we have to comply with it unless there is a legal requirement. One of the spokespersons of the Spanish energy company told this newspaper, otherwise we will face international lawsuits.
Breaking a contract before it expires is risky to say the least and often arbitration courts. “It all depends on the reasons. But if you don’t let go of the gas based on one of the clauses in the long-term contract, you will have to pay a penalty,” he says. Anne Sophie Corbeau From the Center for Energy Studies.
Reasons for “force majeure”
These “force majeure” items may be sanctionsbut also natural disastersa war or unilateral change contract terms. “You’re basically at the mercy of the court and you’re probably going to be stuck for years in a very expensive process that you don’t know how to end up with,” adds Corbeau.
And losing those cases can be extraordinarily troublesome. French last December total energy He started his departure from Russia by resigning from some projects or Novatek Board of Directors Departure, It will continue to supply Russian gas unless the European Union imposes gas sanctions and gives companies on the continent force majeure to withdraw from their contracts. Otherwise, his CEO explained, Patrick Pouyanne unilateral breach of contract “forces” Pay between 40,000 and 50,000 million on penalties.”