Naftogaz refuses to pay Gazprom for non-purchased gas

Naftogaz of Ukraine has confirmed the receipt of Gazprom’s $5.3 billion invoice for the gas that the company had neither ordered nor received during 2016. However, the company does not intend to pay for it until the decision of the Stockholm arbitration. This was reported to the Interfax-Ukraine news agency by the press service of Naftogaz.

"In its explanation of the bill, Gazprom refers to the take-or-pay form of gas delivery. At the same time, Naftogaz has no plans to pay the bill until the Arbitration Tribunal makes a decision regarding the issue, whether the take-or-pay regulation of the contract can be applicable within the existing arbitral dispute," Naftogaz representatives noted.

Naftogaz reported that during 2016 the company had repeatedly stated its readiness to purchase natural gas from Gazprom on the conditions applied to gas purchases from this supplier in 2014 and 2015. The Ukrainian company asked Gazprom to sign the relevant amendments to the contract.

"Gazprom refused to sign such amendments in 2016 without providing any reasons for its refusal and this fact gives additional grounds to assert that Gazprom claims are unsubstantiated," Naftogaz stressed.

On January 17, 2017 Gazprom announced that it had billed Naftogaz of Ukraine for 2016 in the amount of $5.3 billion for the failure to intake gas in the II-IV quarters according to the take-or-pay form of delivery. In the first quarter of 2016, the take-or-pay condition was not applied to Naftogaz of Ukraine in accordance with the tripartite "winter package.”

In June of 2014, Gazprom appealed to the Arbitration Institute of the Stockholm Chamber of Commerce with a request for arbitration in order to recover a debt from Naftogaz for the gas delivered in 2013 and 2014. For its part, Naftogaz also applied to the Arbitration Tribunal demanding to make retroactive changes to the price, reimbursement for the overpayments and lifting of the restrictions on re-export. The court combined the two claims.

Currently, Gazprom’s claim amounts to $31.75 billion. The claim of Naftogaz, submitted against Gazprom for violations of the gas supply contract, amounts to $18.1 billion. $14.2 billion of Naftogaz's claim relate to the issue of prices for gas purchased by Ukraine in the period from May 20, 2011 to October, 2015.

Arbitrators plan to make a decision by the end of March, 2017.

  Ukraine, Russia, Naftogaz, Gazprom

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