UPDATE 3: Naftogaz Ukrainy says wins supply contract suit against Gazprom

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MOSCOW, Dec 22 (PRIME) -- The Stockholm arbitration court ruled in favor of Ukrainian energy holding Naftogaz Ukrainy in a claim against Russian gas giant Gazprom in a gas supply contract, the Ukrainian holding said in a statement on Friday.

The court voided Gazprom’s take-or-pay condition and reduced the gas price for April–June 2014 to U.S. $352 for 1,000 cubic meters, according to the statement.

“The condition of re-export prohibition and other stipulations have been voided in order to bring the contract in compliance with the current market standards,” Naftogaz Ukrainy said.

The company estimated the total positive effect from the court decision at more than $75 billion, including $56 billion from the take-or-pay voidance for 2009–2017 and $1.8 billion from price revision for the gas bought in 2014 and 2015.

Naftogaz Ukrainy also had the future obligatory purchases from Gazprom reduced by more than 90% and brought in accordance with its real needs.

A decision by the court on the gas transit case is expected on February 28, the company said in a post on its Twitter blog. A price tie to prices of oil and oil products has been replaced with spot market guidance, according to a Twitter post of the company.

Gazprom said that the court charged Naftogaz Ukrainy more than $2 billion for the earlier supplied gas and a 0.03% interest for each day of overdue. “Despite the statements made by Naftogaz Ukrainy earlier, the arbiters ruled valid the key stipulations of the contract and satisfied the main part of Gazprom’s claims concerning payments for the supplied gas which had set the start for the litigation.”

Naftogaz Ukrainy will have to buy at least 5 billion cubic meters of gas from Gazprom annually from 2018, Gazprom said. According to Naftogaz Ukrainy, it used to purchase 52 billion cubic meters of gas.

Gazprom also said that the Stockholm court decided in May to turn down Naftogaz Ukrainy’s claim for price revision for the period from May 2011 till April 2014. The take-or-pay rule will remain active until expiration of the current contract and ruled that the European and Ukrainian antimonopoly legislations are inapplicable to it.

Gazprom and Naftogaz Ukrainy have been litigating since 2014 over contracts on gas supplies to Ukraine and gas transit across Ukraine. A preliminary ruling of the Stockholm court on the gas supply contract was made on May 31, 2017, its details were not disclosed. Ukraine said that the court in its interim decision cancelled a take-or-pay condition of the contract, allowed Kiev to re-export gas, and ordered a revision of the gas price retroactively from 2014.

Director of Fitch’s department for natural resources and raw materials Dmitry Marinchenko said that the court decision is neutral for Gazprom. “From the point of view of influence on the financial state of both companies, the decision is in general neutral for Gazprom and moderately negative for Naftogaz Ukrainy.”

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