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Germany maintaining LNG trade with Russia – Bloomberg

Breaching the contract could reportedly cost the country billions of dollars

Germany is continuing to transport Russian liquefied natural gas (LNG) despite its commitment to cut energy ties with the sanctioned country, according to a Bloomberg report. Violating the deal with Moscow would reportedly cost the taxpayer-funded company responsible billions of euros.

Securing Energy for Europe (SEFE), a former unit of Berlin-based Gazprom Germania, is shipping Russian LNG produced at the Yamal plant as part of an inherited contract. The deal was struck before German authorities took over and nationalized Gazprom’s subsidiary last year as part of anti-Russia sanctions.

Although the cargo is bound for India and is not subject to Western sanctions, the state-owned German company has been facing sharp criticism for maintaining energy ties with Russia even after Berlin vowed to stop using Russian gas.

“This contradicts pretty much everything the German government has said on the subject in the past,” Christian Leye, a member of parliament from the opposition Left Party said earlier this month.

“The economic entanglements with Russia are apparently not as easy to resolve as politicians would have us believe.”

SEFE received a shipment from the Yamal liquefaction plant in early October using the company’s tanker, the Amur River, for further transportation to India, the outlet said.

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The German firm has a long-term contract with Yamal LNG. It also has a separate long-term agreement for deliveries with the Indian company GAIL. Under a 2018 agreement with Russia, SEFE would have to pay for the Russian LNG cargos even if they weren’t transported to India.

“Like every long-term supply contract, this old SEFE contract also contains very strict contractual penalties and liability consequences in the event that SEFE does not fulfill its contractual obligations,” a SEFE spokesperson said, declining to comment on specific conditions.

The take-over of the former Gazprom Germania last year cost German taxpayers between €6.3 billion and €7.7 billion. Canceling the existing contract with Russia could be significantly more expensive for the country’s taxpayers. According to rough estimates, the cost of damage and penalties could amount to at least €10 billion, making such a move unlikely, Bloomberg said, citing people familiar with the matter.

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