Ukraine, Russia In Fresh Gas Dispute As Gazprom Withholds Restart Of Supplies

Glen Norman
March 3, 2018

Yesterday, the Stockholm arbitration court ruled in favor of Naftogaz in the payment dispute with Gazprom, ordering the Russian company to pay Naftogaz US$2.56 billion for failing to supply Ukraine with the agreed amount of natural gas over a period of several years and also for failing to pay the full transit fees for the gas it did pump in that direction.

The gas row is part of a broader political conflict between the two countries, which flared up after Russia annexed Ukraine's Crimea in 2014 and a pro-Russian separatist rebellion erupted in eastern Ukraine.

It was already the evening of February 28 the when the Stockholm arbitration court (The Arbitration Institute of the Stockholm Chamber of Commerce) announced its decision on the second dispute of Naftogaz of Ukraine and Gazprom on the gas transit contract.

"Gazprom had to immediately start the procedure of the termination of the contracts with Naftogaz on gas supplies and transit at the Stockholm arbitration court", Miller said in a statement, as cited by Reuters. It did not give further details.

The March deliveries would have been the first time Ukraine bought gas from Russian Federation since November 2015, when it started buying gas from Europe via so-called reverse flows to try to cut its energy dependency on Moscow.

The price dispute over Gazprom's deliveries to Ukraine ended up at the worldwide arbitration court in Stockholm, Sweden in June 2014, and the arbitrator has now made a decision to award Naftogaz $4.63 billion in damages.

"These steps should be sufficient in order not to create a gas deficit in the system", he said.

He added: "But we will get them".

It said it would "defend its rights in all ways available to it in accordance with applicable law".

The contract in question was signed by then prime minister Yulia Tymoshenko and was widely derided as Ukraine ended up paying some of the highest prices in Europe for Russian gas.

All of these terms relate to gas that Ukraine buys for its own use.

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