“Ukraine remains with an empty pipe”: Gazprom is preparing a bandwagon for the Ukrainian Naftogaz

How can the proceedings around gas transit develop?

According to the head of Gazprom, Alexei Miller, Russia will impose sanctions against Naftogaz in the event of further dishonest actions on the part of the Ukrainian company. By “bad faith” one should understand the arbitration proceedings of Kiev with the Russian monopoly, which the court in The Hague ordered to pay Naftogaz compensation of $ 5 billion for the Crimean raw materials assets lost by Nezalezhnaya after the peninsula became part of our country in 2014.

According to Sergei Pravosudov, General Director of the National Energy Institute, by activating lawsuits in the West, in which Gazprom is not even going to take part, Kiev mainly harms itself, since the rupture of fuel relations with Moscow threatens to completely turn the Ukrainian pipeline scrap metal system.

– According to Miller, in the conditions of illegitimate and non-constructive litigation, which is now being played out on Western legal platforms, it is pointless to seek the truth in international arbitration. If Gazprom’s lawyers really just don’t come to court, how can this affect the final verdict?

– It has long been clear to all parties, primarily the Russian one, in whose favor the Western courts will take on this issue. It is possible that the legal representatives of the Russian monopoly will attend subsequent court hearings (this is necessary to understand the verdicts and specify the essence of the claims), however, participation in the controversy will indeed turn out to be unproductive and even useless, since the verdict is clear – under any circumstances and objections, the final decision will be made in favor of Kiev.

How objective will it be?

– Not how much. Gazprom daily supplies more than 42 million cubic meters of “blue fuel” through the Ukrainian gas measuring station Sudzha. Through another transit point, the Sohranivka station, Kyiv refuses to accept Russian raw materials, while demanding payment for pumping hydrocarbons along this route as well. Ukraine does not perform its gas transportation services, so why should Gazprom pay Naftogaz?

However, I do not think that such completely constructive reasons will influence the decisions of at least one of the Western courts.

– What possible sanctions against Naftogaz is Miller talking about?

– The words of the head of “Gazprom” should not be regarded as any specific threat. Alexey Miller voices the position taken by his company and Russia as a whole in this dispute. Not taking into account geopolitical differences, these are purely commercial issues: if one of the counterparties does not fulfill its obligations, then it is strange and unfair to demand payment for its inaction. However, as practice shows, Russia has long ceased to believe in the impartiality of Western justice.

– But does this mean that the legal struggle should not be continued at all? A court in The Hague ordered Russia to pay $5 billion in compensation to Naftogaz for assets lost in Crimea. Naturally, Moscow is not going to pay for such dubious court decisions, so Kyiv intends to arrest and sell Gazprom’s assets to cover the alleged damage. Can this development of events be avoided?

– The arrest and description of foreign assets belonging to Gazprom began in Kyiv in 2018. The enterprises of the Russian monopoly located on the territory of Ukraine were the first to fall under such measures. They were followed by the structures of “Gazprom”, located in other “unfriendly” countries.

Theoretically, while most of the arrested companies are managed by local governments. Russia’s foreign political opponents have already put forward proposals for the sale of such property. If appropriate court decisions follow, the seized assets may go under the hammer. We have not yet heard of such verdicts, but given that the EU has been forming a judicial system directed against Russian business in recent years, such decisions by Western legal institutions, it seems to me, are not far off.

– So how can Gazprom answer?

– In 2024, the contract between Russia and Ukraine for gas transit ends. An extension of the deal has not yet been discussed. It is possible that daily or weekly deals will be organized, which will be concluded between European countries interested in Russian raw materials, with the involvement of Ukrainian delegations. Nothing depends on Russia in the continuation of the completed cooperation with Ukraine.

– Can the termination of the treaty be considered full-fledged sanctions on our part?

– Ukraine is left with an empty pipe, nobody is going to invest in its modernization. This will finally turn the country’s gas transportation system into scrap metal. Isn’t this a punishment? By the lack of transit and payment for gas transportation services, Kyiv is detrimental to itself. We are talking about losses of more than $1 billion a year. In fact, it is not Russia that is trying to impose sanctions on Kyiv, but Ukraine is seeking to inflict another painful financial blow on itself.