NEW DELHI (REUTERS) – Gazprom Singapore has failed to deliver some liquefied natural gas (LNG) cargoes to Indian state firm GAIL and has said it may not be able to meet supplies under their long-term deal, three sources familiar with the matter said.

The sources did not say why Gazprom Marketing and Trading Singapore (GMTS) did not deliver the supplies. Global competition for the super-chilled fuel and low inventories have sent Asian LNG prices soaring.

GMTS is a subsidiary of Gazprom Germania, a former unit of Russian energy giant Gazprom, now under the control of Germany’s network regulator.

“We are facing difficulties, (the) situation is quite tight as GMTS has already defaulted on some cargoes and they have said they may not be able to meet commitments under the contract,” said one of the sources.

Reuters reported on Monday that Gazprom had told customers in Europe that it couldn’t guarantee gas supplies due to ‘extraordinary’ circumstances. According to a letter dated July 14, Gazprom declared ‘force majeure’ on supplies, meaning it did not have to meet its contractual obligations.

GMTS is willing to offer a penalty to the Indian company for missed cargoes. One of the sources said the penalty is miniscule compared to spot prices of LNG.

“GMTS’ LNG portfolio has been restricted as a result of the Russian sanctions,” Germany’s network regulator said in an e-mailed statement.

“GMTS is therefore using the mechanisms existing in its contractual agreements to manage the situation with its customers,” it added, not providing further details.

GAIL, GMTS, Gazprom and Gazprom Germania did not respond to Reuters requests for comment.

GAIL, which imports and distributes gas and also operates India’s largest gas pipeline network, agreed in 2012 a 20-year deal with Russia’s Gazprom for annual purchases of an average 2.5 million tonnes of LNG. Supplies under the contract began in 2018.

GMTS had signed the deal on behalf of Gazprom. At the time, Gazprom Germania was a unit of the Russian state firm.

However, following Western sanctions against Russia over its invasion of Ukraine, Gazprom gave up ownership of Gazprom Germania in early April without explanation and placed parts of it under Russian sanctions.