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24.3 24.65
26.7 27.25
Economy 2019-05-15T04:54:08+03:00
Ukrainian news
Gazprom To Terminate Contracts With Naftogaz To Avoid Future Fines For Failing To Fulfill Obligations On Gas T

Gazprom To Terminate Contracts With Naftogaz To Avoid Future Fines For Failing To Fulfill Obligations On Gas Transit Volumes

The Gazprom gas company (Russia) intends to terminate its contracts for supply and transit of natural gas with the Naftogaz of Ukraine national energy company to avoid future penalties for annual transportation of less than 110 billion cubic meters of gas on transit through Ukraine.

Gazprom's CEO Alexei Miller announced this at a meeting with Russian Prime Minister Dmitry Medvedev, the Ukrainian News Agency reports.

"According to the arbitration decision, Gazprom should pay Naftogaz of Ukraine USD 2.56 billion. However, with the understanding that Naftogaz of Ukraine stated immediately that it would impose penalties on us from the upcoming 2018/2019 until the end of the contract based on the Stockholm Arbitration decision and we will be forced to pay a few billion dollars, of course, these contracts become economically unbeneficial to us under such conditions, inexpedient from an economic point of view. Gazprom has decided to begin the procedure for termination of the contracts through the Stockholm arbitration court," he said.

Miller added that the process of termination of the contracts between Gazprom and Naftogaz of Ukraine could take up to two years.

"Undoubtedly, the contract termination procedure is not very fast. Apparently, it will take a plus or minus 1.5-2 years," he said.

As Ukrainian News Agency earlier reported, the Arbitration Institute of the Stockholm Chamber of Commerce ruled in favor of Naftogaz of Ukraine on February 28 in a dispute in which it claimed USD 4.63 billion from Gazprom as compensation for failing to deliver the agreed volumes of natural for transportation on transit through Ukraine.

Gazprom will have to make a net payment of USD 2.56 billion to Naftogaz of Ukraine since the arbitration institute previously ordered Naftogaz of Ukraine to pay Gazprom for gas supply arrears.

The arbitration decision also confirmed Gazprom's legal obligations regarding gas supplies under the transit contract.

Gazprom announced on March 2 that it intended to begin the process of terminating its contracts with Naftogaz of Ukraine for supply and transit of natural gas at the Arbitration Institute of the Stockholm Chamber of Commerce.

According to President Petro Poroshenko, the contract between Naftogaz of Ukraine and Gazprom cannot be terminated unilaterally.

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