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Ukraine, Russia In Fresh Gas Dispute As Gazprom Withholds Restart Of Supplies

Natural gas pipeline

Just hours after an arbitration court ruled in favor of Naftogaz in a long-running payment dispute between the Ukrainian state company and Russia’s Gazprom, a fresh gas dispute flared up on Thursday after Naftogaz said that Gazprom had not stood by its commitment to resume gas supplies, forcing Ukraine to reduce gas usage amid Arctic temperatures as the ‘Beast from the East’ freezing weather front sweeps across Europe.

The new rift comes after years of bitter disputes between the gas companies of Russia and Ukraine, exacerbated by the 2014 Russian annexation of Crimea.

“Naftogaz is surprised to learn of Gazprom’s decision not to supply gas to Ukraine in March. Naftogaz has already provided full prepayment for deliveries in line with an invoice received from Gazprom under the terms of the supply contract amended by the Stockholm Arbitral Tribunal,” the Ukrainian company said in a statement on Thursday. On Twitter, the company went further to say that “Restarting purchases from @GazpromEN after 825 days of standby proved tricky. Alarmingly unreliable conduct of the Russian supplier.”

Yesterday, the Stockholm arbitration court ruled in favor of Naftogaz in the payment dispute with Gazprom, ordering the Russian company to 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.

Related: The Endless Opportunities For U.S. Oil Exports

Gazprom’s CEO Alexander Medvedev said the company had received payment from the Ukrainian company for gas to be pumped its way this month, but had returned it. The reason is that the two companies have yet to sign a supplement to their original contract reflecting the court’s ruling.

“Naftogaz will demand that Gazprom provides compensation for the damage caused by this violation,” the Ukrainian company said today.

To cope with the lack of Russian supplies in freezing temperatures, Naftogaz said that it would cut short-term consumption and buy additional supplies from Europe.

Gazprom, for its part, expressed today its disagreement with the Stockholm arbitration ruling and said that “Gazprom will defend its rights through all means available under applicable legislation.”

By Tsvetana Paraskova for Oilprice.com

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