Naftogaz: Crimean suit claims against Gazprom may rise to $8 bln

ROTTERDAM, Sep 28 (PRIME) -- Ukrainian energy holding Naftogaz Ukrainy expects the Permanent Court of Arbitration in The Hague to rule in a suit against Russia on the loss of assets in Crimea until the end of 2018, and sees claims under the suit rising to U.S. $8 billion, CFO Yury Vitrenko told PRIME late on Wednesday.

On September 20, Naftogaz Ukrainy and six its units filed the suit with the Hague court against Russia seeking to recover U.S. $5 billion in damages over the loss of assets in Crimea after the republic joined Russia in 2014 and all local companies owned by Naftogaz Ukrainy were nationalized.

Vitrenko said that the arbitration court may ask the sides to submit adjusted claims when it is ready to make a decision. “And we will just recalculate interest as of a certain date,” he said, confirming that the company will demand redemption of interest in addition to the $5 billion claim.

“We expect a decision until the end of 2017. By the time, a $2 billion interest will already have been accrued to $5 (billion), and another $1 billion will be accrued, so it will amount to about $8 billion,” he said.

He also said that the company is unlikely to resume purchases of Russian natural gas until the end of 2019, when the current contract with gas giant Gazprom expires. “We did not rule out this possibility before. There is a theoretical possibility of that, but it will depend on two things: on the decision of the (Stockholm) arbitration court and on Gazprom’s willingness to fulfill it,” he said.

“We will be ready to buy gas from Gazprom if we are legally obliged to do it, if a decision of the arbitration court says that the contract is in force and both companies have to fulfill it. But the court has already decided on the price, and it should be a ‘hub’ price. We are generally satisfied with this, as it is significantly lower than the price offered by Gazprom now, and even lower than the European gas price, as we buy the gas in Europe at a ‘hub plus’ price.

“But it depends on many other factors. Prepayment or post payment, the issue of supply points and so on. We will obviously never agree with Gazprom supplying gas to points in Eastern Ukraine that are not under our control and are on the occupied territories. There are many factors here, so it is difficult to forecast anything.”

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