Russia's Gazprom asks court to halt Ukraine gas contracts after losing dispute

04 March, 2018, 03:53 | Author: Gregory Stephens
  • Vincent Mundy  Bloomberg

"Clearly, gas supplies to Ukraine's Naftogaz will not be carried out from 1 March", said Gazprom's deputy head Alexander Medvedev, as cited by Reuters.

Ukraine's GDP was $93.27 billion in 2016, according to the World Bank; 2.3% of this sum is $2.14 billion. Naftogaz also referred to the negotiations earlier offered to Gazprom on the need to revise the transit tariff from 2010 in accordance with the European rules.

The tribunal awarded Naftogaz damages of $4.63 billion, but as payments for gas delivered in 2014 and 2015 have already been settled, the amount Gazprom will have to pay is lower, Kallanish Energy learns.

"Naftogaz's revenues make up 8% of GDP, and Ukraine's transit income is 2.3% of GDP", Vitrenko said. The decision seriously violates the balance of interests of the parties under these contracts, according to Miller.

Naftogaz has reduced its gas consumption at thermal power stations by 5-10%, Ukraine's state-owned energy firm Naftogaz said on March 2.


"We started the procedure for the termination of contracts with Naftogaz of Ukraine, and a new case in Stockholm arbitration on this suit will be absolutely sure considered by another composition of the arbitrators", Medvedev said. Kiev demanded to change the transit tariffs, which it established independently.

It follows Wednesday's worldwide arbitration court order for Gazprom to pay $2.56 billion to Naftogaz after weighing mutual claims and counter-claims related to gas supplies and transit. The total amount of Ukrainian company claims was $6-12 billion.

The Stockholm Arbitration satisfied the requirements of the companies only partially.

Ukraine is the main route for the Russian gas to Europe where Gazprom accounts for around 35 percent of the market share. Therefore, it was counting on the victory over the second dispute.

The move on Saturday not only marked an escalation in a multi-year dispute between Moscow and Kyiv, but also led to concerns about downstream gas supplies to European countries.

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