ČEZ has started arbitration against Gazprom, asking for around one billion crowns

ČEZ has started arbitration against Gazprom, asking for around one billion crowns

ČEZ ​​started arbitration against Gazprom, asking for roughly one billion crowns

St. Petersburg, Russia: In this illustrative photo, the Gazprom logo at the St. Petersburg International Economic Forum 2022.

Prague – Energy company CEZ has formally started arbitration proceedings against Russian gas company Gazprom. Due to the reduction of natural gas supplies last year, he is requesting damages of around one billion crowns. ČTK was informed about this today by ČEZ spokesman Ladislav Kříž. The possibility of arbitration was already mentioned last October by the Chairman of the Board and CEO of ČEZ Daniel Beneš.

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“The Geneva-based arbitration will be decided by a three-judge arbitral tribunal,” the spokesman said.

The situation surrounding Russian gas supplies became more complicated when Russia launched an attack on Ukraine last February and the European Union adopted a series of anti-Russian sanctions in retaliation. Gazprom has the largest reserves of natural gas in the world and has a monopoly on the export of this strategically important raw material from Russia through a network of gas pipelines. The Kremlin has control over the company.

Last year, among other things, Russia stopped the operation of the Nord Stream 1 gas pipeline, which supplied Russian gas to Germany through the bottom of the Baltic Sea. Nord Stream 1 could transport up to 167 million cubic meters per day.

But Beneš believes that Russia's energy war against Europe started about a year before the invasion of Ukraine. According to him, Russia subtly stopped supplying gas, the level of storage tanks was falling. “It was a sneaky move on the part of Russia,” he said in October on Czech TV's (ČT) Otázky Václav Moravec program.

Even then, he identified international arbitration as the only possible step. “At the moment when someone does not fulfill the contract you have, it is difficult to talk about anything other than compensation for damages,” Beneš said when asked whether CEZ and Gazprom are negotiating supplies for this year. According to him, supply outages clearly damaged ČEZ. “It is in the higher hundreds of millions, up to the first billions of crowns, logically we will enforce it,” said Beneš in ČT. According to him, the question is what can be done.

Prime Minister Petr Fiala (ODS) stated at the end of January this year that the Czech Republic reduced its dependence on Russian gas last year from the original 97 percent to the current maximum of four percent . The state replaced gas from Russia by importing gas from Norway and liquefied LNG gas from overseas. In the future, the state wants to limit its dependence on Russian gas completely, it also wants to replace the import of Russian oil with other sources.

The wholesale price of gas for the European market reached close to 350 euros last August due to restrictions on supplies from Russia 8400 CZK) per megawatt hour (MWh). Since then, however, it has already dropped significantly, in recent days it has fallen below 68 euros (roughly 1,630 CZK) per MWh. The drop in prices is due to a mild winter and a high level of liquefied natural gas supplies.