Swedish court rejects Gazprom appeal in one Naftogaz case

The Svea Court of Appeal rejected on Nov. 27 Gazprom’s
appeal against one of the rulings of the Stockholm Arbitration Court in favor
of Naftogaz (NAFTO), the state gas producer and transporter reported the same
day. The May 2017 ruling rejected Gazprom’s claims on the take-or-pay clause
and the ban for natural gas re-exports under a gas supply contract, as well as
agreed that Naftogaz was entitled to market-reflective adjustments to the gas
price formula. The Svea court’s ruling cannot be appealed, Naftogaz clarified.

This was the first of three appeals of Gazprom against
the rulings of the Stockholm court. Other two appeals will be heard in February
2020 (on a gas supply case) and in autumn 2020 (on a gas transit case),
Naftogaz reported, highlighting that the Stockholm court awards remain valid
and in full effect regardless of the appeals.

Recall, in December 2017, the Stockhom court ruled
that Naftogaz should compensate Gazprom USD 2.02 bln
for part of natural gas it imported in 2013-2014; in February 2018, the court
ruled that Gazprom should compensate Naftogaz USD 4.63 bln
for breaching its gas transit contract. This resulted in a net obligation of
Gazprom to Naftogaz in the amount of USD 2.56 bln. Gazprom is trying to appeal
both rulings.

Alexander Paraschiy: Naftogaz’s victory in this first appeal case builds confidence that
Gazprom’s two other claims will be rejected. So most likely, Gazprom won’t be
able to challenge successfully the USD 2.56 bln (plus interest) in net
obligations to Naftogaz. The key question is whether Naftogaz will be able to
recover these funds from Gapzrom.