Ukraine’s Naftogaz Celebrates Arbitration Victory; Russia’s Gazprom Denies the Verdict

Naftogaz has stood victorious in the long-standing arbitration with Gazprom. The Stockholm arbitration tribunal has turned not just the victory in favour of Naftogaz but also provided them with 4.630 billion dollars. This money will be used to recover the gas prices of consumed gas during 2014, by Naftogaz.

Of the total amount received, around 2.56 billion dollars will be given to the NSJC Naftogaz budget. The Ukraine President commented on the victory and said that it was a joint effort of the government, the President and Naftogaz. The CEO of Naftogaz also expressed his happiness and commented on how the result will positively benefit Ukraine and the European market.

Gazprom Denies Defeat, Challenges Naftogaz

While Ukraine is celebrating, Russia’s Gazprom refuses to accept the verdict. This verdict is expected to further intensify the already weakened Ukraine-Russia ties, raising the gas conflicts. In this 2nd transit dispute, the arbiters at Stockholm have asked Gazprom to pay the Ukrainian company a said amount of money, much less than the initial claimed amount. The verdict is simply asking Gazprom to pay a penalty for the gas that it failed to pump.

The official statement released by Gazprom on the verdict states:

Gazprom expresses its disagreement with this decision by the arbitration institution. Earlier, the same arbiters agreed with Naftogaz’s explanations that the decline in the demand for gas and Naftogaz’s non-compliance with its gas purchase commitments were caused by a slump in the Ukrainian economy. However, the same argument – a decline in gas purchases by European consumers as the main reason for less transit via Ukraine – was not taken into account as far as Gazprom was concerned

The 1st verdict demanded Ukraine to pay a 2 billion dollars’ debt for gas supplied in 2013-14 and the 2nd verdict now demands Gazprom to pay 4.6 billion dollars to compensate for the transit gas that was not supplied; thus making Naftogaz, Ukraine, gain 2.6 billion dollars.

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