13:17 27.05.2022

Naftogaz launches pre-arbitration procedure due to underpayments by Gazprom under gas transit contract - Vitrenko

2 min read
Naftogaz launches pre-arbitration procedure due to underpayments by Gazprom under gas transit contract - Vitrenko

NJSC Naftogaz Ukrainy has started a pre-arbitration procedure due to Gazprom's failure to comply with a "pump or pay" condition under a contract for organizing natural gas transit, Naftogaz head Yuriy Vitrenko has said.

"We have already started the pre-arbitration procedure. We are preparing appropriate appeals to Gazprom with lawyers. There is some time during which we must try to resolve the issue before arbitration, if we do not – new arbitration. The reason is that they pay less than they should pay under the contract. They have no justification for this – our contract is pump or pay," he said in an interview with Interfax-Ukraine.

The head of Naftogaz recalled that the failure of Gazprom to fulfill its contractual obligations under the contract entails a violation of the settlement agreement, according to which Naftogaz abandoned claims in the $12.2 billion arbitration dispute initiated in 2018.

"If they do not fulfill the 'pump or pay' obligation, then this means that they are violating not only the contract for organizing transit, but also the settlement agreement. That is, this is arbitration not only for the amount of underpayment, but also for $12.2 billion, which we withdrew from arbitration," Vitrenko stressed.

As reported, the GTS Operator of Ukraine declared force majeure for the acceptance of gas for transit through the Sokhranivka gas measuring station, occupied as a result of Russian military aggression, due to the lack of operational and technological control over the Novopskov compressor station, having suggested Gazprom transfer transit to the Sudzha gas measuring station.

In accordance with the Ukraine-Russia-European Commission intergovernmental protocol signed on December 20, 2019, during December 27-30, a package agreement was implemented with the payment of $2.9 billion by Gazprom to Naftogaz according to the decision of the Arbitration Institute of the Stockholm Chamber of Commerce, the waiver of existing claims by the parties, and signing a transit agreement for five years.

The agreement between Naftogaz and Gazprom for the organization of transportation, the transport agreement between Naftogaz and GTSOU, as well as the inter-operator agreement between GTSOU and Gazprom were signed on December 30, 2019.

The contract provides for transit of at least 65 billion cubic meters in 2020, and in 2021-2024 – 40 billion cubic meters each. Payment for the above volumes is guaranteed even in case of less pumping through the GTS of Ukraine.

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