Stockholm arbitration decision cuts price of Russian gas for Naftogaz by $20-50

The decision of the Arbitration Institute of the Stockholm Chamber of Commerce cuts the price of Russian natural gas for national joint-stock company Naftogaz Ukrainy to $20-50 per 1,000 cubic meters compared with the old formula-pegged price, Naftogaz Ukrainy Chief Commercial Director Yuriy Vitrenko said on ICTV channel.

"The price under the revised contract will be considerably lower than the price calculated using the old formula. Now the difference is around $20. However, the sum will vary depending on the season. For example, in the second quarter the difference will reach $50, as when the weather is warm market prices of gas fall. Earlier the formula was pegged to petroleum products and did not reflect the market trends in Europe," he said.

Vitrenko said that now the cost of Russian gas for Naftogaz, taking into account the decision of the Stockholm Arbitration Institute, is $ 20-30 less than the cost of gas purchased in the German market, due to the exclusion of the transport component.

According to the chief commercial director, the arbitration decision obliges Naftogaz to purchase 4 billion cubic meters from Gazprom in 2018 on the basis of take or pay. These supplies can begin in March.

"The decision of the Stockholm Arbitration is based on the principle that we must buy half of our annual import needs from Russians," Vitrenko said.