Europe has been searching for new sources of energy since Russia invaded Ukraine, and now the need has suddenly become much greater. Russia’s majority state-owned energy giant Gazprom said Monday that it cannot comply with gas contracts in Europe due to unforeseeable circumstances.
Energy Crisis In Europe Heats To Boiling
Uniper, the German energy firm, confirmed to CNBC that Gazprom had claimed “force majeure” on its gas supplies. That legal term refers to a situation in which unforeseeable circumstances prevent one party to a contract from being able to fulfill their duties as set forth in that contract.
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Theoretically, a force majeure statement would absolve them from having to pay penalties for breach of contract. Uniper spokesman Lucas Wintgens told CNBC that Gazprom Export claimed force majeure "retroactively for past and current shortfalls in gas deliveries." They see the declaration as "unjustified and have formally rejected the force majeure claim."
Another energy company in Germany, RWE, also confirmed to CNBC that it also received a force majeure notice from Gazprom. Officials with the Russian energy giant were not available for comment when CNBC contacted them on Tuesday.
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Officials throughout Europe have become more and more concerned that Russia would shut off its gas supplies to the continent. They started worrying even more after the closing of the Nord Stream 1 gas pipeline that runs from Russia to Germany. It's reportedly undergoing maintenance, but some European officials doubt that Russia will fully restore the gas flows after the work is due to be completed on July 21.
About 40% of the gas imported by European countries came from Russia before its invasion of Ukraine. Officials across the continent have been scrambling to halt their dependence on Russia, but that takes significant amounts of money and time.
The Latest On Energy Prices
However, they have been making some progress. The European Commission revealed new gas deals with the U.S. and Azerbaijan as it works to secure new fossil fuel suppliers. Natural gas prices in Europe have skyrocketed due to the reduced flows from Russia.
In the U.S., an analyst from GasBuddy warned that the falling gasoline prices could stall due to various factors. Petroleum analysis chief Patrick De Haan told Fox Business that the national average gas price in the U.S. could fall under $4 a gallon by mid-August. However, he also warned of factors that could reverse that decline, including hurricane season and earnings results.
