The insurers of the Nord Stream pipelines refused to pay a $426m blast damage claim due to an exclusion clause triggered by attacks by government entities during war, according to UK court filings.
The two 1,224-km natural gas pipelines under the Baltic Sea were ruptured in September 2022 in a suspected state-backed attack linked to Russia’s invasion of Ukraine.
The attack contributed to the European Union rethinking its maritime defence strategies.
Nord Stream in February lodged a €400m ($426m) claim in London against the European subsidiaries of Lloyd’s of London and Arch Capital Group.
The insurers’ defence lodged this month stated that the policy did not cover losses from war or explosions carried out under the orders of a government or public body.
The insurers said they would rely on the fact “that the explosion damage could only have (or, at least, was more likely than not to have) been inflicted by or under the order of a government”, according to the defence document.
Two blasts 6.5 km apart on the pipelines Nord Stream 1 and 2 severed the gas link between Russia and Germany and briefly disrupted shipping lanes. Investigators later identified explosive material, which pointed to a deliberate act.
Responsibility for the attacks has long been disputed and remains unclear. Denmark and Sweden closed investigations after confirming sabotage of the pipelines but declining to identify who was responsible.
Western allies have blamed Russia for the attack to deprive Europe of energy supplies.
Russia has blamed the US and its allies while Ukraine has also been blamed for carrying out the attack to limit Europe’s reliance on Russian fossil fuels and cut its revenues. All have denied responsibility.
The pipelines were built by Gazprom with one operational from 2011, while the second was never used after Germany halted the project days after the invasion of Ukraine.
Nord Stream is based in Switzerland with Gazprom the majority shareholder. German, Dutch and French companies held smaller stakes.
The company says in legal papers that the initial estimated cost to repair the pipelines and replace the lost gas would be between €1.2bn and €1.35bn.
Total investment in the pipeline system has been €7.4bn.
Read more
- Ukraine war prompts EU to beef up maritime security
- Governments, oil majors seek OSVs to monitor infrastructure after Nord Stream blasts
- Security tensions near boiling point as gas lights up shipping
- Denmark imposes no-shipping zone in Baltic Sea after Nord Stream pipeline ‘sabotage’
- EU members push for natural gas price cap, with shipping excluded
