Yamal LNG wins Singapore ruling on €149 million contract

The Singapore High Court left intact an SIAC award that found Yamal LNG had the right to end its contract with Nuovo Pignone, the Italian unit of Baker Hughes, after the supplier did not take reasonable steps to minimize the impact of sanctions on Russia. The contract for gas combustion equipment was signed in December 2021, but Baker Hughes stopped shipments in 2022 after Western sanctions tightened following Russia’s invasion of Ukraine.

Yamal LNG declined to make another payment, arguing it would only deepen its losses, while Nuovo Pignone suspended the contract. Both sides then sent termination notices, turning the dispute into a test case for how sanctions interact with force majeure-style contract obligations and mitigation duties.

The arbitral tribunal said Nuovo Pignone could suspend the contract because Yamal LNG had not paid, but the supplier still had a duty to try to reduce losses, including by seeking sanctions licenses or modifying equipment. A majority of arbitrators also agreed Yamal LNG had validly terminated the deal and ruled that Nuovo Pignone was not entitled to payments under guarantees or security arrangements.

For investors, the decision underscores legal and execution risks for global energy contractors with exposure to Russia-related projects, while offering some support for LNG operators facing blocked supply lines and payment disputes. Shares in Golar LNG and Cheniere Energy were little changed in recent trading, but the broader market backdrop remains supportive for LNG after technical readings showed both names holding above their 50-day moving averages.

The case also lands against a more cautious geopolitical backdrop: Adalytica’s Global Stability Sentiment gauge sits in “Fear,” while its natural gas trade signals show “Greed,” reflecting persistent volatility in energy markets and continued investor focus on supply disruptions. The key issue now is whether more sanctions-linked disputes follow the same path, potentially forcing suppliers and project owners to rethink contract language, insurance coverage and dispute resolution in future LNG deals.