DEPA Commercial, the Greek gas supplier, has taken the step of filing for arbitration in a bid to secure a price revision for its gas supply agreement with Gazprom, as revealed by DEPA CEO Constantinos Xifaras on Thursday.
The state-controlled entity seeks not only a retroactive reduction in the gas price outlined in the 2022 contract but also seeks relief from future payments amounting to hundreds of millions of dollars, according to sources familiar with the situation.
During the Power and Gas Forum in Athens, Xifaras disclosed ongoing negotiations with Gazprom spanning approximately two years, with a focus on price readjustment. He stated, "Commercial negotiations are ongoing now, they haven't stopped, however, the company... has taken the next step which is to go to arbitration."
Despite requests for comment, Gazprom did not provide a response. Similarly, DEPA was unavailable for immediate comment on the specifics of the arbitration process, which typically can be initiated by either party in a private long-term gas supply contract.
In January 2022, DEPA entered a deal with Gazprom for the supply of 2 billion cubic metres (bcm) of gas annually until 2026. The pricing structure of the contract is linked to the Dutch TTF price by 80%, with the remaining 20% indexed to oil prices.
The eruption of the Ukraine conflict and subsequent disruptions in Russian pipeline deliveries led to a surge in European gas prices, with the TTF price peaking at a record high of 306 euros per megawatt-hour in August 2022.
Consequently, DEPA encountered difficulties in selling its gas and was ultimately unable to meet its minimum annual purchase obligations.
Under the terms of take-or-pay contracts, buyers are obligated to pay for gas irrespective of whether they can physically receive deliveries. Untaken volumes accrue as credits until the contract's conclusion.
DEPA's claims also extend to Gazprom's sales to Greek competitors, with sources indicating that such transactions hindered DEPA's ability to fulfill its gas commitments.
Beginning September 2022, Gazprom commenced significant LNG exports to Greece via its Portovaya LNG project, with Mytilineos, Greece's largest private energy company, identified as the buyer according to satellite data from analytics firm Kpler.
However, Mytilineos declined to comment on the terms and pricing of its purchases, citing commercial confidentiality.
(Source: Daily Mail UK)
