Naftogaz expects court ruling on litigation with Gazprom today

28 February 2018

The Stockholm arbitration court is expected to rule today on litigation between Ukraine’s Naftogaz and Russia’s Gazprom, the Ukrinform news agency reported this morning, citing Naftogaz commercial director Yuriy Vitrenko. Namely, today the court should rule on Naftogaz claims that Gazprom owes it up to USD 12.3 bln as under-payment on natural gas transit.


Recall, based on December’s court ruling on gas supply litigation between Naftogaz and Gazprom, the Ukrainian company owes Gazprom USD 2.02 bln as under-payment for gas supplied in 2Q13 and 2Q14. The total demands of Gazprom on gas supply was over USD 47 bln, mostly consisting of compensation for Naftogaz’s breach of the take-or-pay clause that the court declined to satisfy.


Alexander Paraschiy: It is very unlikely that the court will fully satisfy Naftogaz’s USD 12.3 bln claim against Gazprom, but we see it as realistic that the court will award about USD 4 bln that Gazprom underpaid for gas transit under new rates (set by the Ukrainian power sector regulator) in 2016-2017. Therefore, our base-case scenario is that Naftogaz’s net gain from the litigation may reach USD 2 bln.


In the negative scenario (if the court totally rejects Naftogaz’s claims), Naftogaz will have to find USD 2.07 bln to pay Gazprom, which may have negative consequences for Ukraine’s entire balance of payment, as well as for the prospects of the Ukrainian currency.