Ukraine, Gazprom to Discuss Transit in April

Ukraine's Naftogaz and Russia's Gazprom have agreed to another round of negotiations in April where Gazprom is expected to reveal its plans to use Ukraine's pipelines to transit gas to the EU when the current contract expires in 2019.

Naftogaz said March 27 that also up for discussion is its tariff revision request.

The two sides met last week to discuss their next steps. Gazprom made clear its refusal to resume deliveries to Ukraine under the terms of the Stockholm arbitration case concluded in December last year. Gazprom also refused to confirm that it will pay the $2.6bn which it was directed to pay for gas transit in February. Both arbitration awards are final and binding on Gazprom, said Naftogaz.

Gazprom’s position in the meeting was instead to amend the contracts or to terminate the contracts to reverse the decisions of the tribunal. Both positions are in direct contravention of the awards, Naftogaz said, and it has rejected Gazprom’s proposals.

“Gazprom’s refusal to honour valid arbitration awards by an internationally valued and respected commercial arbitration tribunal seriously questions Gazprom's trustworthiness as a partner to the European gas industry. It is also endangering the respect for contracts as such with its unlawful withholding of payments due under the decisions of the tribunal,” said Naftogaz chief commercial officer Yuri Vitrenko.

The Stockholm Arbitration Tribunal had jurisdiction in the cases following from contractual agreements to that effect between Gazprom and Naftogaz. Gazprom said that the rulings were not commercial but political – Ukraine had to be kept solvent – and has started the process of terminating the contracts for gas sales and transit. The 800-page rulings are confidential, and both sides can quote selectively from them.