Ukraine's Naftogaz refuses to terminate transit agreement with Gazprom
Naftogaz of Ukraine received notice of plans from Russia’s Gazprom to appeal to Stockholm’s arbitration tribunal regarding contracts for the supply and transit of gas. The company considers Gazprom’s proposals unacceptable, said commercial director of Naftogaz Yuriy Vitrenko, as reported by channel 112 Ukraine. He added that there are no grounds for dissolving the gas transit agreement in Kyiv.
The Ukrainian top manager said that the gas contracts stipulate the procedure for cancelling them. One party should give the other 30 days’ notice in the case of a gas supply contract and 45 days’ notice for a transit agreement. During this period, the companies should negotiate and attempt to reach an agreement. If they do not, then they will turn to arbitration in Stockholm.
The transit contract can be changed, the Naftogaz representative stressed. According to him, the document “can be made more in line with European norms and rules.”
On Monday, March 5, the Russian company officially notified the Ukrainian company that it was beginning proceedings to terminate the contracts. The company explained that its actions were because of “a significant violation of the commercial balance between these contracts.”
The decision comes after the arbitration in Stockholm ruled on February 28 that Gazprom was obligated to pay Naftogaz more than $4.6 billion for the shortfall in agreed volumes of gas under the transit agreement (taking into account the payment for the delivered gas, the Russian company must pay $2.56 billion). Gazprom began to cancel contracts with Naftogaz on March 3. President of Ukraine Petro Poroshenko said that the actions of the Russian company are “tools of gas blackmail” directed against Ukraine and EU countries.