Naftogaz not to pay $5.3-bln Gazprom bill ahead of Stockholm arbitration ruling
KYIV. Jan 18 (Interfax) - Naftogaz Ukrainy has confirmed it received a $5.3 billion bill from Russia's Gazprom for gas the company did not order in 2016, but the Ukrainian national oil and gas company does not intend to clear it until Arbitration Institute of the Stockholm Chamber of Commerce issues its final decision, the press service of the company told Interfax
"Gazprom refers to the take-or-pay requirement in explanations to the bill. Naftogaz does not plan to clear the bill. Until the decision is made by the arbitration tribunal, the take-or-pay provision of the contract is to apply within the existing arbitration," the company said.
Naftogaz said several times in 2016 that it is ready to buy natural gas from Gazprom on the conditions applied to gas purchases in 2014 and 2015 with signing of supplements to the contract.
Gazprom refused to sign the supplements in 2016 without explaining its refusal. This gives additional grounds to say that Gazprom's claims are groundless," the company said.
On January 17, Gazprom billed Naftogaz $5.3 billion for not accepting contracted take-or-pay provisions for gas in 2016.
If that amount is included in the earlier declared claims in the Stockholm arbitration case, the amount of claims in the case in fulfilling the contract on supplies will grow to $37 billion, which makes up more than half of Gazprom's capitalization of $61 billion.
"Today Gazprom sent Naftogaz Ukrainy a bill to pay for gas which was not accepted by the Ukrainian company in Q2-Q4 2016 under take-or-pay provisions. According to the current contract between Gazprom and Naftogaz Ukrainy for the purchase and sale of natural gas, the Ukrainian company was required to pay a minimum annual amount of gas every year. According to the conditions in the contract, Naftogaz Ukrainy was presented with a bill for $5.319 billion. Ukraine is required to pay the amount in the next ten days," Gazprom's press office said.
In Q1 2016 Naftogaz Ukrainy did not use take-or-pay conditions in accordance with trilateral winter packages.
"Take-or-pay is not simply a condition written in the contract. It is the essential basic principle of work in the gas industry. It guarantees that gas will be sold only to the buyer indicated in the contract. All of this, both significant capacity reserves when we speak about daily supply volumes of over 100 million cubic meters, as well as current operating costs and the inability to sell gas to somebody else, undoubtedly has an important price for the buyer," Gazprom Chairman Alexei Miller told journalists.
In June 2014 Gazprom approached the Stockholm Arbitration Institute's Chamber of Commerce with a request for arbitrage with the goal of recovering Naftogaz's debt for gas supplied in 2013 and 2014. Naftogaz in turn brought a case against Gazprom seeking a retroactive revision of the price and compensation for the amount overpaid and the removal of bans to re-export gas. The court has combined both cases. At the moment, Gazprom's claims in the case total $31.75 billion. A decision is expected to be made at the end of March 2017.