Skip to comments.Arbitration Court Rules in Favour of RWE on Price Revision with Gazprom
Posted on 05/08/2014 9:57:24 PM PDT by WhiskeyX
An arbitration tribunal ruled that Germany's RWE has overpaid gas supplies from Russia's Gazprom, disposing a rebate for the German utility.
"In its final award, the tribunal awarded RWE a reimbursement for payments made since May 2010 and adjusted the purchase price formula of the contract by also introducing a gas market indexation, which according to the arbitral tribunal reflects the relevant conditions on the gas market at the time of the price revision in May 2010," reads a note released by RWE on Thursday.
RWE said that it is currently analysing the award and the effect on its full year guidance in detail, adding that it will inform about the financial implications of the ruling in short-term.
The agreement is part of a broader trend for pricing renegotiations between European utilities and gas suppliers from North Africa and Russia.
I remember one time I didn’t pay my gas bill. I understand the ruling, but I wonder if the hand on the spigot will?
Sounds like a negotiated contract being modified, ex post facto, and a new benchmark being put into place. Political revenge or not, this ain’t a cool thing. If both sides inked it, they should honor it.
Then as it ends, the EU should sign one they find meets their needs.
“I remember one time I didnt pay my gas bill. I understand the ruling, but I wonder if the hand on the spigot will?”
Russia had promised to abide by the letter and spirit of the rules and refrain from using its Gazprom state monopoly to coerce or extort economic and political concessions in pursuit of political aggression as the Soviet Union had done so in the past. Putin and his Russian regime have abrogated those agreements, so the Europeans will now have to extricate themselves from a reliance upon Russia’s untrustworthy agreements. Europe is making progress in doing so since the last confrontation with Russia in 2008-2009, but it will take some time to further do so.
I hope the Russians shut off all gas to the EU and let the bastards freeze in the dark!!
“Sounds like a negotiated contract being modified, ex post facto, and a new benchmark being put into place.”
No, that is totally wrong. The contract/s used a formula, but the formula failed to remove ambiguities in which benchmarks were intended to be used by the parties as the basis for applying the formulae. Gazprom took advantage of the ambiguities to charge a greater amount than the customer had agreed to pay. The customer paid the price demanded by the seller while reserving the right to dispute the seller’s interpretation of the contract terms pending a resolution of the dispute. The contracts typically include terms requiring the submission of such disputes to some form of arbitration for settlement. In this instance the agreed upon arbitration tribunal examined the contract and decided the plaintiff, RWE, was correct in its interpretation of the contract terms and introduced a new method of reckoning the basis to remove the ambiguities relied upon by Gazprom to produce a higher price than RWE has chosen to agree upon. This is typical in such commercial disputes between domestic public oil and gas companies. The participation of the Russian Gazprom monopoly is different to the extent the monopoly is used by the Russian state to implement coercive extortion or shakedowns of the economies of their foreign partners in furtherance of aggression.
“I hope the Russians shut off all gas to the EU and let the bastards freeze in the dark!!”
The Russians already did so when Russia invaded and occupied the territories of Georgia. The Warsaw Business Journal published an article saying the EU was now prepared to replace the Russian natural gas supplies in one year.
The impending EU independence from the Russian natural gas supplies is another significant reason why Putin found it necessary to invade and conquer the Ukraine at this time, before the energy independence of the EU could be completed, before Yanukovych could be removed by a Ukrainian election, and before Obama could lose control of the U.S. Senate in the 2014 mid-term elections. This is Putin’s last remaining military campaigning season before his opportunity to pursue a war of aggression to rebuild and further expand the USSR 2.0 is forestalled by adverse events in the West.