Naftogaz, Gazprom complete arbitration hearing, may meet on Dec. 9

The international arbitration court in Stockholm has completed hearing claims filed by Gazprom and Naftogaz regarding a contract to supply and transit natural gas in Ukraine that was signed in 2009, Naftogaz official Yuriy Vitrenko reported on his Facebook page on Dec. 5.

The court’s ruling on the gas supply contract is expected in 1Q17, and the ruling on gas transit issues should arrive in 2Q17, Naftogaz CEO Andriy Kobolev told Ukrainian television the same eveninhg. He also said that an amicable agreement is impossible between Gazprom and Naftogaz. The claims of Naftogaz against Gazprom amount to USD 28.3 bln as of end-July, and Gazprom’s claims against Naftogaz amount to USD 38.7 bln, Interfax-Ukraine reported.

In other news, Naftogaz reported via social media that it supports the idea of meeting with the Russian side – with EU mediation in Brussels on Dec. 9 – to discuss the possible resumption of gas imports from Russia to Ukraine. According to Kobolev, Ukraine can resume imports of Russian gas if Gazprom’s offer will be cheap enough, if the take-or-pay clause won’t work, and if there will be a clear list of routes of gas inflow to Ukraine (to exclude Gazprom supplies to the occupied territories).

In other news, the Anti-Monopoly Committee of Ukraine (AMCU) told Interfax-Ukraine on Dec. 5 that it won another local court battle with Gazprom. The Economic Court of Kiyv ruled to penalize Gazprom UAH 172 bln (USD 6.6 bln), which includes a UAH 86 bln fine for breaching Ukraine’s antitrust legislation and UAH 86 bln in charges for non-timely payment of the fine. Recall, AMCU charged UAH 86 bln from Gazprom in January 2016, claiming it was abusing its market power as a buyer of gas transit services in Ukraine.

Alexander Paraschiy: It’s hard to predict the probability of success for Naftogaz in either ruling in the Stockholm court, as well as hard to derive any consequences for Gazprom from the AMCU’s victory in the local court (we expect an appeal). And from what we know about the positions of the Ukrainian and Russian sides, we are skeptical about any solution at the possible meeting in Brussels this week.