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    Russia Needs to Fulfill Obligations: Naftogaz


The Ukrainian company's chief commercial officer has made some acerbic remarks about Russia and gas, on his Facebook page.

by: William Powell

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Russia Needs to Fulfill Obligations: Naftogaz

Russian state-run gas monopoly Gazprom must fulfill its obligations to Kiev, including paying the arbitration award of February 2018, Naftogaz Ukrainy CCO Yuriy Vitrenko said on his (Ukrainian-language) Facebook page October 3. It must also allow third parties to supply gas, ending its monopoly on pipeline exports, he said.

Russia has been demanding that Ukraine drop its claims for damages against Gazprom, but Vitrenko said this was unacceptable. Those were set at $2.56bn, and interest has been mounting since then.

"I would remind that the Stockholm Arbitration has ruled that Gazprom has to pay Naftogaz a compensation due to non-compliance with the conditions of the current transit agreement. What is the point in contracts if one of the parties can violate its terms and not bear any responsibility for it?" He asked. 

He also said that Naftogaz "rightly demands that Gazprom allows the possibility for Ukraine to receive gas from Turkmenistan and from independent producers in Russia."

Quoting Russian president Vladimir Putin, who said October 2 that Russia is ready to sign a contract for gas transit under European rules if Ukraine implements these rules, he asked: "What European rules are we talking about? Those based on tripartite –Ukrainian, European Union and Russian – technical level consultations held in Brussels for almost a year, or European network codes – balancing, capacity allocation, tariffs, and so on – to be implemented by the regulator NERC, which will also certify that the separation between the transmission system operator and the supplier conforms to European rules?"

He said that Russia doubts Ukraine's ability to implement these rules by the end of the year, and that if it fails, then Russia can simply continue the current contract. But Vitrenko said the government and the regulator both say that Ukraine will succeed in the time available. And, he said, "it is important not to forget about the third option – the so-called "swap" operations. This option is preferable to continuing the current contract, and it allows even now to apply European rules for these operations. I have already written about it in more detail," he said.

NGW understands that this refers to a plan whereby Gazprom delivers gas at the Russia-Ukraine border, leaving the customers to negotiate transport with Ukraine. But Gazprom might not want to give away too many trade secrets, including the price it charges at that delivery point.