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Gazprom Appeals Court Decision In Naftogaz Case

Gazprom

Gazprom has lodged an appeal against the ruling of a Swedish arbitration court in its long-running gas transit dispute with Ukraine’s Naftogaz, which was in favor of the Ukrainian company.

TASS quoted the gas giant as saying in a statement that "An extra examination of the text of the decision with engagement of a globally recognized expert linguist showed that a considerable portion of the arbitration award was written by another person, rather than by arbitrators.”

The company went on to say, “Obviously, nobody has a right to substitute arbitrators. Direct decision-making by arbitrators is of critical significance for parties to the dispute and interference of a third person in the decision-making process is a gross violation of the arbitration agreement."

The Arbitration Institute of the Stockholm Chamber of Commerce ruled that Gazprom must pay Naftogaz US$2.56 billion for failing to supply Ukraine with the agreed amount of natural gas over a period of several years, and also for failing to pay the full transit fees for the gas it did pump in that direction.

The Ukrainian company’s victory is pyrrhic, however: of the original US$4.63 billion in payments due by Gazprom, the Stockholm court ruled that only US$2.56 billion would actually be paid out to Naftogaz, as Naftogaz had previously been ordered to pay about $2 billion to Gazprom for arrears. The court also obliged Naftogaz to buy 5 billion cubic meters of natural gas from the Russian company annually starting this year.

Related: Canada To Buy Kinder Morgan’s Trans Mountain Expansion Project

Gazprom, for its part, is demanding over US$37 billion from Naftogaz for gas delivered under a take-or-pay clause over a period of four years, for the amount of gas supplied in May and June 2014, and for other gas debts the company claims Ukraine has incurred over the period.

The appeal has been filed with another Swedish court, the Svea Court of Appeals. TASS quoted Gazprom’s CEO Alexei Miller as saying the arbitration court had applied double standards and had made asymmetrical decisions in the case.

By Irina Slav for Oilprice.com

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