Ukraine, Russia Finish Oral Hearings over Gas Contract Dispute

State importer Naftogaz Ukrainy is expecting to hear the decision of the Arbitration Institute of the Stockholm Chamber of Commerce by March 2017. Oral hearings into the take-or-pay contract dispute with Russian export monopoly Gazprom lasted from September 25 to October 11, and included cross-examination of expert witnesses for both sides. 

The post-hearing brief, when both sides submit their summaries, is expected in November and at the end of that month, hearings begin into the transit contract between the two sides.

Naftogaz claims that Gazprom is not shipping as much gas through its territory as it agreed to, while Gazprom is claiming that Naftogaz has not bought as much gas as it agreed to.

Gazprom has been shipping gas through Nord Stream 1, which did not exist when the transport terms were agreed, while Naftogaz has been buying gas from the west, which was also not a possibility when the take-or-pay terms were agreed. The contract terms were agreed in a 2009, ten-year contract that was hailed as the contract to solve the annual threat of interruption to Russian gas supplies westwards.

Unlike most take-or-pay disputes, this is complicated by the political and military conflicts between Russia and Ukraine.

(Credit: Stockholm Chamber of Commerce)

Hanging over Ukraine is the threat of Nord Stream 2 (NS2) and Turkish Stream which together would enable Russia to meet its European purchasers' demands with little or no need for Ukraine's transport system, once the existing transport contract expires in 2019, depriving Ukraine of several billions of dollars income annually. The presidents of Poland, Slovakia, Czech Republic and Hungary declared their opposition to NS2 at their 'Visegrad Group' summit on October 15.

William Powell