Vitol Group is locked in talks with a German state-backed energy firm after the trading house moved to stop deliveries of crucial gas that could inflict around €1 billion ($1 billion) of losses.
(Bloomberg) — Vitol Group is locked in talks with a German state-backed energy firm after the trading house moved to stop deliveries of crucial gas that could inflict around €1 billion ($1 billion) of losses.
The commodity giant is in discussions with SEFE Marketing & Trading Ltd. over a contractual dispute, in which Vitol argues it has the right to cancel gas flows because of SEFE’s change of ownership earlier this year. SEFE, formerly known as Gazprom Germania, has been controlled by the German government since Gazprom cut off the company in April.
A London judge last week denied the urgent request by SEFE to block the move by Vitol, and said a hearing on the issue could be set for February or March.
“Negotiations are currently under way between SM&T and Vitol,” a SEFE spokesperson confirmed by email. “A suspension of gas supplies by Vitol is not imminent. SM&T refutes the validity of the announced suspension and will continue to contest it through all available channels.”
A Vitol spokesperson declined to comment.
If Vitol cuts off its gas supply, SEFE will have to replace those volumes at much higher prices than when the deliveries were agreed. That poses a risk for the German taxpayer, as well as for SEFE’s customers. Bloomberg News reported the potential losses last week.
The gas deliveries in question involve pipeline flows to the UK, according to two people familiar with the matter.
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