Gazprom may stop gas supplies through Ukraine

Arbitration proceedings initiated by Naftogaz Ukrainy against Gazprom could lead to the Ukrainian company falling under Russian sanctions, which would automatically lead to a ban on fulfilling any obligations to it, Gazprom said on September 27. Such a scenario means a complete halt in transit through Ukraine.

Before the outbreak of hostilities on the territory of Ukraine, the transit of Russian pipeline gas through the territory of the country to Europe went through the Sohranivka and Sudzha points. At that time, Sokhranivka accounted for up to a third of deliveries (about 32.6 million cubic meters per day). However, since May 11, the Ukrainian GTS operator has refused to accept Russian gas at this entry point, arguing that it was force majeure. The operator explained his decision by the fact that he could no longer carry out operational and technological control of the Novopskov compressor station, which is located in Russian-controlled territories. In response, Gazprom stopped paying for these transit capacities, as it believes it has lost access to them. However, the Ukrainian side believes that Gazprom still has to pay for them. In early September, Naftogaz filed a petition for arbitration.

Now Russian gas transits only through the Sudzha point in the amount of about 42 million cubic meters per day.

“Gazprom categorically rejects all the demands of Naftogaz Ukrainy on the initiated proceedings regarding the transit of Russian gas to Europe – services not provided by the Ukrainian side should not and will not be paid,” Gazprom said. The Russian company notified the secretariat of the International Arbitration Court of the International Chamber of Commerce and the current head of NJSC Naftogaz of Ukraine about this.

According to Gazprom, Naftogaz Ukrainy is well aware that under the agreement dated December 30, 2019, default on its part means no payment even in the event of a force majeure claim. Gazprom also recalled that Zurich, Switzerland, was chosen to resolve disputes between the parties, but since Switzerland has moved into the category of “unfriendly countries”, this deprives Gazprom of “the fundamental right to a fair and impartial hearing both in the arbitration itself and in the state courts at the place of its holding.

Tatyana Dyatel