DEPA of Greece Initiates Arbitration Process Over Pricing in Gazprom Deal
Greek gas supplier DEPA Commercial has initiated arbitration proceedings to request a revision of its gas supply contract with Gazprom, according to DEPA CEO Constantinos Xifaras. The company is seeking a retroactive reduction in the gas price outlined in the contract signed in 2022, as well as relief from future payments amounting to hundreds of millions of dollars.
Xifaras revealed that negotiations with Gazprom on price adjustments had been ongoing for approximately two years but have now reached an impasse, prompting DEPA to escalate the matter to arbitration. While Gazprom has not responded to requests for comment, DEPA has not provided specific details about the arbitration process.
In January 2022, DEPA inked a contract with Gazprom for the supply of 2 billion cubic meters (bcm) of gas annually until 2026, with pricing linked to the Dutch TTF benchmark price and oil prices. However, the European gas market experienced significant upheaval following Russia’s invasion of Ukraine and disruptions in Russian pipeline deliveries, leading to a surge in gas prices. Consequently, DEPA faced challenges in selling its gas and was unable to meet its minimum annual purchase commitments.
Under the terms of the take-or-pay contract, buyers are obligated to pay for gas even if they cannot physically receive deliveries. Untaken volumes are carried over as a credit until the end of the contract. DEPA’s claims in the arbitration process also involve allegations of Gazprom selling gas to Greek competitors at lower prices, which hindered DEPA’s ability to fulfill its contractual obligations.
Notably, Gazprom commenced significant LNG exports to Greece from its Portovaya LNG project starting in September 2022. One of the buyers was Mytilineos, Greece’s largest private energy company, which also holds a Gazprom contract extending until 2030. However, Mytilineos declined to comment on the terms and pricing of its purchases, citing commercial sensitivity.
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