Natural gas supply contract: VNG and WIEH reach out-of-court settlement
In reaching the settlement, the companies have resolved their dispute over differences with regard to the legal interpretation of supply obligations. Under the settlement, WIEH will meet all additional costs of replacement procurement in the 2022 financial year and will also refund the financial impact of replacement procurement borne so far by VNG. In addition, the parties will terminate the supply relationship from 2023. WIEH and VNG H&V agreed not to disclose further details of the agreement signed today.
VNG H&V has a natural gas supply contract with WIEH for approximately 65 TWh per year, which WIEH has not consistently fulfilled since mid-May 2022 due to Russian sanctions. Because of this, VNG H&V has been forced to procure replacement quantities at considerably higher prices on the energy markets in order to maintain the ability to reliably supply its customers at contractually agreed significantly lower prices.
“Today’s settlement between VNG H&V and WIEH marks an important step for the stabilisation of the German gas market and the VNG Group. In dialogue with all parties involved, and in particular with the SEFE Group, it has been possible to find a constructive arrangement for terminating a long-term business relationship. At the same time, we have been able to eliminate a significant part of our financial risk, although we still need a long-term solution for the negative financial impacts that remain unresolved so that we can continue to fully meet our obligation with regard to security of supply in Germany. We are in ongoing talks with the German government and our shareholders in this regard,” said Ulf Heitmüller, CEO of VNG AG. “We welcome the German government’s announcement of an economic defence shield as an alternative proposal for gas importers in place of the so-called gas levy. The precise shape of the solution for offsetting the costs of replacement procurement for VNG now has to be clarified as quickly as possible in talks with the government. We need a swift, economically viable solution so that we can steer back into calmer waters,” Heitmüller continued.
VNG submitted an application for stabilisation measures under section 29 of the German Energy Security of Supply Act in early September and before that an application in due time for the energy levy under section 26 of the same act.
VNG is a group of over 20 companies active in the European energy industry, employing about 1,700 people. As a gas importer and wholesaler as well as an operator of critical gas infrastructure, the Group, which is headquartered in Leipzig, is central to the secure supply of gas in Germany. With the “VNG 2030+” strategy, VNG is also pursuing an ambitious path for a market ramp-up of renewable and decarbonised gases such as biogas and hydrogen, paving the way for a sustainable, secure supply and, in the long term, climate-neutral energy system of the future.
