Kyiv rejects Kremlin’s gas proposal

Yuriy Vitrenko, business development director of Naftogaz of Ukraine, wrote a comment on Facebook about Russian Prime Minister Dmitry Medvedev’s suggestion that Russia and Ukraine withdraw all gas-related disputes and claims.

Medvedev had said previously that Russia and Ukraine will have to reach an agreement that both parties like. “Whether they want it or not, it’s clear that in this situation we’ll have to come some sort of zero option,” said the prime minister, noting that Kyiv could buy gas at a discount if an agreement is signed. By “zero option”, Gazprom has previously understood the waiver of mutual claims and the termination of lawsuits.

Vitrenko drew attention to the fact that the Stockholm Arbitration Institute has ruled that Gazprom must pay Naftogaz $2.6 billion plus interest. He noted that, when signing the current contract in 2009, both parties discussed dispute resolution mechanisms, and agreed that such matters would be resolved by the Stockholm-based Arbitration Institute, and that its rulings would be “final and binding”.

Vitrenko therefore concluded that a true “zero option” would be to implement the Arbitration Institute’s ruling in such a way that Gazprom owes “zero”. He noted that Ukraine has agreed to accept gas as a form of repayment.

“To forget Gazprom’s failure to fulfill agreements, to forgive Gazprom $3 billion and withdraw litigation demands in the new arbitration without adequate compensation is an impossible option,” said the head of the Ukrainian company.

The current agreement for the transit of Russian gas through Ukraine to Europe expires on December 31. Moscow has offered to sign a new one-year agreement or to extend the current agreement by a year, but only if Kyiv withdraws all claims and lawsuits. Kyiv is not interested in signing a temporary contract, and instead is hoping for a long-term contract. The parties have held several rounds of negotiations, but have been unable to reach any concrete agreements. On December 5, the Russian Energy Ministry said that a new session could take place next week.

  Naftogaz, Gazprom, Russia, Ukraine