Naftogaz addresses Russian gov’t over seizure of assets in Crimea

Ukraine’s natural gas giant, Naftogaz, filed a notification of dispute to the Russian government, arising “from the Russian Federation’s unlawful seizure of Naftogaz’s investments in Crimea“, the company reported on Feb. 17. In accordance with the terms of an investment treaty, signed between Ukraine and Russia, “Naftogaz has requested consultations and negotiations with the representatives of the Russian Federation to reach resolution of the dispute,” Naftogaz wrote. “If the dispute cannot be settled, Naftogaz intends to submit the dispute to arbitration”.

With occupation of Crimea by Russia in early 2014, Naftogaz lost control over its Crimea-based subsidiary Chornomornaftogaz. This company is a producer of natural gas onshore in Crimea and offshore in the Black Sea. In the year 2013, Chornomornaftogaz produced 1.7 bcm of natural gas, or 8% of Ukraine’s total. Because of the de-facto confiscation of the company by Russian occupiers, Ukraine has lost all its offshore gas production facilities, and has been forced to stop mining gas in the Black Sea.