Russian gas monopoly Gazprom has refused to abide by a Stockholm arbitration court ruling that it pay Ukraine $2.6 billion in compensation for failing to supply transit gas, state-owned oil and gas company Naftogaz of Ukraine reported late on March 27.
Naftogaz said that during the negotiations with Gazprom, the Russian company also “made it clear” that it would not resume gas deliveries to Ukraine with a $500,000 price reduction, as was ordered by the Stockholm court in December.
Both arbitration awards are final and binding on Gazprom, the Ukrainian company said, and added that Gazprom, in fact, wanted to amend the Stockholm decision or terminate the contract with them.
But Naftogaz “finds this position unacceptable and has rejected Gazprom’s proposals.”
“Gazprom’s refusal to honor valid arbitration awards by an internationally valued and respected commercial arbitration tribunal raises serious questions about Gazprom’s trustworthiness as a partner for the European gas industry,” said Naftogaz’s commercial director, Yuriy Vitrenko.
The parties agreed to have another round of negotiations in April.
As reported, referring to EU Vice-President for Energy Union Maros Sefcovic, the European Commission expects Gazprom to comply with the awards and demands of the Stockholm court.
Naftogaz and Gazprom filed multi-billion dollar claims against each other in June 2014 as relations between two countries worsened following Russia’s launch of the war in eastern Ukraine and the start of its military occupation of Crimea.
Naftogaz demanded compensation for losses caused by the disadvantageous terms of the 2009 gas contract, which left Ukraine overpaying for gas supplies and being underpaid for transit services.
After a four-year legal battle, on Feb. 28, Naftogaz won its $4.6 billion claim against Gazprom, which failed to deliver agreed transit gas volumes between 2009 and 2017. Subtracting $2 billion that Naftogaz owes Gazprom, the Russian company would have to pay $2.6 billion.
Ukraine hasn’t been buying Russian gas since 2015. But after this two-year break, triggered by Russia’s war, Russian gas supplies to Ukraine were set to resume on March 1. Nonetheless, the Kremlin indefinitely shut off natural gas supplies to Ukraine on the same day, March 1.
Gazprom CEO Alexei Miller said on March 4 after his company had shut down all gas supplies to Ukraine that the court “made an asymmetric decision,” which violates the balance of the parties’ interests.
“The court attributed its decision to the sharp decline in the Ukrainian economy. We are firmly opposed to Ukraine’s economic problems being solved at our expense,” Miller said.