EU Ready To Mediate In Latest Russia-Ukraine Gas Dispute

Mar 04, 2018, 03:53
EU Ready To Mediate In Latest Russia-Ukraine Gas Dispute

Russia's Gazprom said on Friday it would terminate its gas contracts with Ukraine after it lost a court case, escalating a dispute which has left Ukraine struggling to stay warm and which the European Union said could threaten gas flows to Europe.

Last year, Gazprom supplied a record high of 194 billion cubic meters of gas to Europe, excluding former Soviet states, and Turkey.

It did not give further details.

On February 28, the Stockholm Arbitration Court satisfied Naftogaz's claims on the suit against Gazprom.

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Ukraine's Naftogaz will seek revision of the gas transit tariffs despite the ruling of the Stockholm arbitration court that rejected that demand, Andriy Kobolyev, the chief executive of Naftogaz said.

But after the court decision, Gazprom did not restart gas supplies to Ukraine as expected on Thursday, forcing Kiev to take emergency measures to make up for the shortfall and warn that transit flows to Europe were at risk.

According to the Ukrainian contract Gazprom is supposed to supply 40bcm of gas in 2009, and starting from 2010, 52bcm annually, not the 5bcm figure decided by the arbitration tribunal. The announcement followed the verdict of the Stockholm Arbitration Court which heard the dispute.

"The arbitrators explained their decision with the sharp deterioration in the state of the Ukrainian economy". However, since 2012, Naftogaz failed to fully intake the contracted volume.

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All of these terms relate to gas that Ukraine buys for its own use. Since that date, it has been buying gas from Western Europe in order to reduce its energy dependency on Russian Federation, according to Reuters.

"At the same time, Gazprom did not supply Naftogaz with 18 million cubic meters of gas, for which the company made a prepayment".

The court also ruled that part of the price Naftogaz was supposed to pay would be reduced. 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. Summing the two awards, Gazprom has been left with a bill of $2.56bn.

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