Russia confirms Naftogaz must reject USD 2.6 bln award before gas deal

Russian energy minister Aleksandr Novak confirmed to
journalists on Sept. 24 that the conclusion of a settlement agreement on the
Stockholm arbitration court ruling is an important precondition for Gazprom to
sign a new deal with Naftogaz. He explained that the deal should involve a
“zero option” clause, under which Naftogaz and Gazprom have no mutual financial
claims, as reported by the Interfax news agency. Novak mentioned the demand for
“zero option” in the negotiations with the Ukrainian side last week in
Brussels.

Recall, top officials from Naftogaz and Gazprom met in
Brussels on Sept. 19 to discuss a new contract for the transit of Russian
natural gas since 2020 when the current ten-year contract expires. In February
2018, the Stockholm court awarded Naftogaz net USD 2.56 bln compensation from
Gazprom as a result of thee-year litigation between the sides. According to
Naftogaz, its net financial claim to Gazprom, including delay fines, amounted
to USD 2.82 bln as of end-June 2019.

Alexander Paraschiy: Novak’s
recent comment confirms our undertsanding that the Russian side is doing little
to close a new gas deal with the Ukrainian side by January. Therefore, Naftogaz
will only further prepare for a worst-case outcome, which will likely involve
the temporary stoppage of Russian gas flow though Ukraine since early January.
Nevertheless, some solution is likely to be reached later in 2020 as both
Gazprom and Naftogaz are interested in Russian gas transit though Ukraine.