Russian Gazprom threatens Kyiv with termination of any cooperation through arbitration courts

Russia is threatening sanctions for ongoing arbitration proceedings between Naftogaz, the Ukrainian state-run national oil and gas company, and Russia's Gazprom. Source: Interfax, citing Alexey Miller, the CEO of Gazprom, in a statement on 7 July Quote: "Naftogaz's ongoing arbitration proceedings with Gazprom may lead to the imposition of sanctions by the Russian Federation," Miller told reporters.

Details: He noted that Naftogaz filed another multibillion-dollar lawsuit against Russia in the US courts. According to the head of Gazprom, this will lead to a break in any cooperation.

Quote: "If such unscrupulous actions of Naftogaz continue... then any relations between Russian companies and Naftogaz will be just impossible," he said. Details: According to the Russian news agency, Gazprom is nervous about Naftogaz's demand to fulfil the terms of the agreement from 2019 regarding the transit of Russian gas through the territory of Ukraine for European consumers.

The agreements provided for the signing of a contract for five years with the possibility of extension for another 10 years, the minimum volume of transit: 65 billion cubic metres of gas in the first year and 40 billion cubic metres each in the next four years. Moreover, the Russian side is obliged to pay the specified volumes, regardless of whether they were pumped in practice.

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In May 2022, Ukraine was forced to stop the transit of gas through the Sokhranivka transit point in Luhansk Oblast, which was on the territory temporarily occupied by Russia. A third of the gas is supplied to Europe through this point.

Ukraine offered the Russian side an increase in pumping through another access point, Sudzha. However, the Russian Federation refused to increase transit. And it also refused to pay for underpumped volumes.

In particular, according to Miller, the occupation of the Sokhranivka transit point is "a far-fetched pretext". "The head of the Russian company noted that Naftogaz itself is a violator of its contractual obligations to Gazprom under fabricated pretexts. For example, Naftogaz refuses to accept Russian gas at the Sokhranivka transit point but at the same time demands payment for its transit," Interfax writes.

In September 2022, Gazprom already stated that it categorically rejected all demands of Ukraine's Naftogaz regarding the initiated review regarding the transit of Russian gas to Europe; services not provided by the Ukrainian side should not and will not be paid for, the company emphasised. At that time, Gazprom also stated that it considered the filing of Naftogaz's appeal to the court an unfriendly step and a continuation of the dishonest behaviour of the Ukrainian company. Background: 

In September 2022, Naftogaz of Ukraine filed a request for arbitration with the International Court of Arbitration at the International Chamber of Commerce and Industry in Paris (France) regarding the actions of Gazprom.

The company demanded from Gazprom funds for the service of organising the transportation of natural gas through the territory of Ukraine, which were not paid on time and in full.

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