Ukraine prepares $17 billion worth of new claims against Gazprom

Naftogaz is ready to put forward another $17.3 billion in claims against Gazprom after transitioning to the European standard of regulation of the gas industry, announced the company's executive director Yuriy Vitrenko on his Facebook page.

"My team has clearly formulated and submitted for approval to the supervisory board of Naftogaz additional "issues" to Gazprom for the amount of $17.3 billion. There will be a lot of work ahead of us if this is approved," he wrote.

Vitrenko also commented on reports that the company's management is looking for a replacement for him to take up the issue of Naftogaz's assets remaining in Crimea. Vitrenko noted that the dispute with Russia over Crimean assets is not his main area of responsibility. "My main responsibility as an executive director is the relationship with Gazprom. Actually, in December last year, on behalf of Naftogaz, I signed a transit contract with a guaranteed revenue of $7.2 billion," Vitrenko said.

Vitrenko already mentioned the claims against Gazprom for 17 billion in his Facebook on April 4. Then the top-manager of Naftogaz explained that the process of unbundling (separating the company from managing the Ukrainian gas transport system) at the request of the European Union allows to apply the rules of European regulation to the gas contracts with Russia. "This opens up new opportunities for us (in addition to receiving a guaranteed $7.2 billion), but these opportunities (which we estimate at 17 billion) still need to be taken advantage of. And for this, Naftogaz still needs to be transformed into a modern national company," Vitrenko wrote.

Naftogaz and its subsidiaries filed a lawsuit at the Hague Tribunal in October 2016. At the time, the company assessed its losses at $2.6 billion, and said that it had “a number of valuable energy assets” in Crimea.

In winter 2019, the Court of Arbitration in the Hague ruled that Russia was responsible for the Ukrainian company’s loss of Crimean assets. The tribunal ruled that Russia’s actions were illegal and “violated the bilateral agreement between Ukraine and Russia on the mutual protection of investments”, Naftogaz reported. The Russian Justice Ministry refused to recognize the ruling and pointed out Russia had not participated in the proceedings. The Russian department promised to take “all necessary measures” to protect Russia’s interests.

That marked the conclusion of the first stage of the case. The court now needs to establish the amount of compensation due to Naftogaz.

During the consideration of the case, the Ukrainian company’s assessment of its losses grew initially to $5.2 billion, and then to an amount in excess of $7 billion.

Yuriy Vitrenko said that a session of the International Court of Arbitration in the Hague would be held at the end of 2020 or in 2021.

At the end of 2019, Gazprom and Naftogaz settled the dispute over the gas agreement. Kyiv estimated that it would receive at least $7 billion as a result of the settlement.

In total, the company has received $5 billion in arbitration with Gazprom. This amount consists of $2.9 billion paid at the end of December 2019 for the undelivered volume of gas transit and $2.1 billion received by Naftogaz in the form of gas supplied by Gazprom in 2014. As a result of the disputes, Naftogaz and Gazprom abandoned mutual claims for transit, but in February Kyiv announced its intention to file new claims against Gazprom on other issues.

  Naftogaz, Gazprom, Russia, Ukraine, Vitrenko