Ukraine, Russia Attempt Contract Settlement

Ukraine's and Russia's state-owned gas enterprises are to battle out their gas contract differences on neutral ground or face a final decision by the Arbitration Institute Tribunal of the Stockholm Chamber of Commerce, Ukraine's Naftogaz said July 4.

The two sides are "holding a series of negotiations attempting to agree on amendments to the gas supply contract and the final settlements between the parties based on the tribunal’s decisions," it said.

The separate award of the tribunal of May 31 on the gas supply case contains principles for calculations of the retroactive compensation for amounts overpaid by Naftogaz and the price to be applied to gas that had been received by Naftogaz but not fully paid. This includes gas delivered at the height of the tensions in 2014, when Crimea voted to be governed from Moscow instead of Kiev and war broke out in eastern Ukraine.

If Naftogaz and Gazprom fail to agree on the wording of the amendments and amounts to be paid, the final decision shall be made by the arbitration tribunal.

In May the tribunal decided that the take-or-pay clause and the ban on redeliveries were not applicable, freeing Naftogaz from the burden of a $44bn payment to Gazprom, including interest. It has not yet decided on the ship-or-pay contract, also dating back to 2009, whereby Gazprom was to ship perhaps as much as 50bn m³/yr across Ukraine but which, since the first Nord Stream line started up in late 2011, it has been able to avoid.

William Powell