The EU’s proposed use of force majeure to ban the remaining Russian gas and LNG flows may not succeed in possible arbitration hearings, which could pose serious concerns for Europe’s main contractual buyers of Russian LNG.
The commission's proposal aims to ban gas and LNG imports from Russia under existing long-term contracts from Jan. 1, 2028, which would likely have a significant impact on the LNG portfolio of French major TotalEnergies, Spanish utility Naturgy and Germany's SEFE Securing Energy for Europe.
The EU plans to invoke a force majeure mechanism in order to break the long-term contracts of EU companies for Russian gas and LNG, therefore shielding the firms from future contract liabilities and potential arbitration cases.
However, the use of a force majeure, which essentially refers to unforeseeable events that prevent a party to fulfil its contractual obligations, carries significant legal risks for the companies involved, the Oxford Institute for Energy Studies (OIES) suggested in its recent report published earlier this month.
OIES argues that challenges will likely come from the required unforeseeability of the event given that restrictive measures against Russian gas and LNG imports have been widely discussed both publicly and politically for years.
