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    Ukraine Tells Gazprom: See You in Court



A dispute over balancing gas could end up in the stocholm arbitration institute

by: William Powell

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Natural Gas & LNG News, Corporate, Litigation, TSO, News By Country, Ukraine

Ukraine Tells Gazprom: See You in Court

Naftogaz Ukrainy is prepared to go to court to settle the payment terms of 5mn m³ owed to Gazprom, it said in a statement February 15.

The gas in question was for balancing purposes relating to gas delivered beyond Ukraine during a four-month period when Ukraine itself was not buying any gas for its own needs from Russia. Ukraine does not deny the gas is Gazprom's but it wants to pay for it in the European way, which is slower than the Russian way.

The European practice of balancing considers payment for these amounts is due in the period following the accounting period. Gazprom, for its part, insists that Naftogaz pays penalties for balancing gas at the end of each month in which it did not import gas from Russia for use in Ukraine. 

Naftogaz first made this proposal in the summer of 2014 and at the moment it is being studied by the Arbitration Institute of the Stockholm Chamber of Commerce.

Naftogaz defines balancing gas as gas that accumulates during the process of transporting gas. The amount of gas entering the system does not match the quantities transferred to neighbouring grids in any given period to the nearest cubic metre. These balancing volumes might add up to a few percent of the total amount of gas transported over a given period.

Gazprom’s counter-claim concerns 5mn m³ of balancing gas, accumulated over four months of 2014 during the period when Naftogaz imported no Russian gas for Ukraine.

The volume Ukraine transported to the European Union in that period was 17.42bn m³, so the question that remains unregulated concerns 0.03% of the volume transported, Naftogaz calculates.

Naftogaz said there had also been that problem with the lack of definition of balancing gas in previous years. But yielding to Russian pressure, Naftogaz was forced to buy this gas. Naftogaz said it was confident that the two sides would find a way to settle the dispute in accordance with European standards of gas market operations, including in the courtroom. 


William Powell