MNI China Daily Summary: Monday, June 17

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CHINA PBOC CONDUCTS CNY4 BILLION VIA 7-DAY REVERSE REPOS MON

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Germany Continues Trading Russian Gas Amid High Cancellation Costs

LNG

Germany’s SEFE, formerly part of Gazprom, continues to trade Russian LNG as the cost of cancelling the contracts could exceed 10 billion euros, according to Bloomberg.

  • SEFE has a legacy offtake agreement signed before its nationalisation in 2022. The 20-year contract obliges lifting of cargoes from Russia’s Yamal project. SEFE is required to pay for cargoes even if it declines to load.
  • “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 told Bloomberg.
  • The cargoes are currently bound for India and not subject to sanctions. There are no plans to import volumes into Europe.
  • The deal puts the German government in a difficult position: it is marketing and selling Russian gas while also calling for tougher sanctions on Russa, according to Christian Görke, the oppositional Left Party’s finance expert.
Energy BulletsCommodities
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