“”Gazprom” explained the termination of contracts with “Naftogaz” unwillingness to pay new fines

The Prime Minister called the decision “Gazprom” to cancel the contracts through the courts is a normal legal way

Prime Minister Dmitry Medvedev and Chairman of the Board of PJSC “Gazprom” Alexey Milletto: press service of the Russian government/TASS

– “Gazprom” has decided to terminate contracts with “Naftogaz” not to pay the new fines for 2018 and 2019, said the Chairman of the Board “Gazprom” Alexey Miller at a meeting with Prime Minister Dmitry Medvedev.

Miller noted that “Stockholm court of arbitration adopted the asymmetric solution which has broken the balance of interests of parties to contracts for the supply and transit”.

“Arbitration decision “Gazprom” to pay “Naftogaz” to $2.56 billion But with the understanding that the NJSC “Naftogaz of Ukraine” made the statement that for the upcoming 2018-2019 until the end of the contract “Naftogaz of Ukraine” on the basis of the decision of the Stockholm arbitration will collect more fines from us and we will be forced to pay another few billion dollars. Of course, in such circumstances, for us, these contracts become economically inefficient, impractical from an economic point of view. “Gazprom” has decided to initiate the procedure for termination of the contract in court through the Stockholm arbitration. But we have already appealed under the contract for gas supply to Ukraine until the end of March the appeal will be submitted on the contract for the transit. Initiated procedure termination of the contract in the prescribed manner”, – he explained.

“Without a doubt, the decision on the termination of contracts is a procedure is not very fast. Apparently, it will take plus or minus a year or two. But for transit to Europe via Ukraine currently, there are no risks, if the course will not be unauthorized selection from the NJSC “Naftogaz of Ukraine”, – said Miller.

“Gazprom” expects that the new proceedings before the Stockholm arbitration court will correct the imbalance of interests with Naftogaz, Miller said.

In turn Medvedev noted that the appeal to the court for the termination of contracts of “Gazprom” to “Naftogaz” “a normal legal way of termination of the contractual relationship.” “All contracts have the property, as the lawyers say, to change, to occur, eventually they will come to fruition or is terminated in the prescribed manner. In this case, in court. This is a normal legal way of termination of the contractual relationship.”

Transit out of danger

Risks of gas transit to the EU only if “Naftogaz” will not be unauthorized to take away the gas, said Miller.

“For transit to Europe via Ukraine currently, there are no risks, unless, of course, will not be unauthorized selection from the “Naftogaz of Ukraine”, – he said.

Earlier, the Minister of energy of Russia Alexander Novak also noted that the dispute between “Gazprom” and “Naftogaz” will not affect gas supplies to Europe. “On the contrary, currently being implemented, historically the largest volume of supply on the European market in today’s temperatures, and “Gazprom” once again confirms itself as a reliable supplier of gas for the past 50 years”, – stressed the Minister.

Outside influence

Medvedev said about the inadmissibility of attempts of politicians of the EU and US influence on bilateral dispute “Gazprom” and “Naftogaz”. “In my opinion, it is essential that all these proceedings took place in the framework of the existing law identified by the parties. To those directly involved in the disputing parties themselves – I mean Gazprom and the Ukrainian side. And, in fact, expressly provided for in the existing agreements,” – he stressed.

“But as for other ways to influence such relations, then, in my opinion, this is absolutely wrong. This has obvious political overtones. I mean and individual comments, which allow officials from the European Union, and even, quite paradoxically, from the State Department of the United States of America. Neither the European Union nor any other Ministry of foreign Affairs for bilateral relations between Gazprom and its Ukrainian contractors have no relationship, and these relationships need to be addressed within the existing legal framework. Not excluding, of course, all procedures: appeal procedures, and procedures for termination of the contract existing parameters”, – concluded Medvedev.

Future cooperation

Miller and Medvedev emphasized that to refuse continue cooperation “Gazprom” and “Naftogaz Ukraine” it is impossible, but Ukraine has to prove the efficiency of transit of Russian gas to Europe through its territory.

“In the current environment, it is important to note that there is already the Ukrainian side needs to prove the economic efficiency and expediency of the continuation of transit of gas through territory of Ukraine. And we are ready to listen and to consider such a proposal if suddenly such proposals will be,” said Miller.

“Of course, no options to close it is not necessary. It’s just a matter of profitability, performance of the contract,” agreed the Prime Minister.

The dispute between “Gazprom” and “Naftogaz”

Two arbitration dispute “Gazprom” to “Naftogaz” lasted in the Stockholm arbitration more than three years: the court of the debt for gas from June 2014 to December 2017, according to the transit contract from October 2014 to February 2018. And by the end of the term of the contract (transit and contractor) is less than two years (end of 2019).

February 28, Stockholm arbitration ordered Gazprom to pay Naftogaz $4.63 billion for failure to supply the agreed volumes of gas for transit. However, the previously awarded in favor of “Gazprom” amounts under the contract for the supply, the arbitrators made an offsetting, which “Gazprom” is obliged to pay “Naftogaz” of $2.56 billion

On March 1, Gazprom announced that he had received and returned the advance payment of “Naftogaz” for March. The next day, the head of Board “Gazprom” Alexey Miller said that the Corporation, after the decision of the Stockholm arbitration is not in their favor cancels a contract for the supply and transit of gas from NAK “Naftogaz Ukraine”.

On 6 March, Gazprom announced that it has filed an appeal against the decision of the Stockholm arbitration on the gas supply at the hearing on the transit of the appeal will be filed before the end of March 2018. In turn, the NJSC “Naftogaz of Ukraine” stated that an appeal may be lodged exclusively on procedural issues and not in fact the decision of the Stockholm arbitration.

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