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Thursday, December 8, 2016

Two cases of Naftogaz to Gazprom contradict each other


Gazprom told the details of the second lawsuit Naftogaz in the Stockholm arbitration court, which deals with the transit of supplies. Russia pays for transit less than desirable to Kiev. Therefore, Gazprom, says Ukraine allegedly underpaid Ukraine at least $ 6.2 billion. In the reality of the situation is, to put it mildly, quite different.

Gazprom in its report according to IFRS for 9 months of 2014) said the essence of the claim of the Ukrainian Naftogaz on transit contract for $ 6.2 billion (according to preliminary estimates, which, apparently, can grow). Kiev filed this lawsuit in the Stockholm arbitration court on 13 October 2014. Its essence is to renegotiate the terms of the transit contract for 2009-2019 in hindsight.

“I was particularly surprised by the amount charged by Naftogaz Russia. Where did they get these amounts, if any penalty is not in the contract”

Specify that in 2009 Russia and Ukraine (Gazprom and Naftogaz signed two gas contracts: one for the supply of Russian gas for Ukraine, the second – the transit of Russian gas through Ukraine to the EU.

In the summer of 2014 Gazprom and Naftogaz exchanged lawsuits against each other for the first contract on gas supplies to Ukraine (Kiev requires a revision of prices for Russian gas and the conversion retroactively, and payment of $ 6.5 billion, and Moscow requires payment of a debt of $ 4.5 billion for gas already delivered). October the claim of Naftogaz for the other transit contract.

What are the claims of Naftogaz on transit contract? In short, Kiev is unhappy that Gazprom pumps gas and pays for the transit is less than he would have liked. And even considered that Gazprom allegedly owed him at least $ 6.2 billion.

The volume of transit

Naftogaz requires the claim to Gazprom paid $ 3.2 billion compensation for insufficient volumes of gas transit plus interest. “Calculation of losses covers the period from 2009 to the time of the filing of the lawsuit,” he said in October 2014, the head of the Department of business reform of Naftogaz Yuriy Vitrenko.

In the transit contract from 2009 between Naftogaz and Gazprom do have a point about the fact that Gazprom undertakes to pump 110 billion cubic meters of gas through Ukrainian pipes to Europe. But in 2013, the transit was only 86 billion cubic meters, and in 2012 to 83 billion cubic meters.

As a rule, in the transit contracts a “pump and pay” for the breach of which can prescribe penalties. But in the case of Ukraine no penalties for violating the rule of “pump and pay” for Gazprom in the transit agreement is not provided. “I was particularly surprised by the amount charged by Naftogaz to Russia for it. Where did they get these amounts, if any penalty is not in the contract?” – says the General Director of the national energy security Fund Konstantin Simonov.

“Who prevented Ukraine when signing the contract in 2009 to provide these fines? No. They have decided that it is not profitable,” he adds.

Refer also to the illegitimacy of the transit contract from 2009, the new government can not. “Nobody questioned the legitimacy of Yulia Tymoshenko (it was under her leadership was signed the gas contracts with Gazprom in 2009 – approx. OPINION), and the legitimacy of the leadership of Naftogaz at the time. Tymoshenko was imprisoned by Yanukovych in prison for the gas deal with Russia, which were recognized by the betrayal of the Ukrainian state. But the first decision of the revolution was to release Yulia from prison and drop all charges. Thus, the revolution acknowledged that Tymoshenko was imprisoned illegally. This means that the revolution has recognized the legitimacy of gas contracts with Russia from 2009. Therefore, it strikes me that the new government of Ukraine is trying to challenge them, because she released Tymoshenko”, – says the interlocutor of the newspaper VIEW.

Finally, when Ukraine wants Russia to pay a fine for reprocheck a certain amount of gas through the pipe in the EU, there is another question. The fact that in another contract for the supply of Russian gas for Ukraine itself have mirrored the “take and pay” principle, which not only clearly recorded in the document, but also for his violation of the prescribed penalties. In this condition, Naftogaz must choose annually to 54 billion cubic meters of gas. Without penalty he can only choose 20% less, about 41.6 billion cubic meters. Naftogaz may reduce the selection of gas without penalty by 20%, but only if in six months he wrote the appropriate application to Gazprom. Otherwise, the contract stipulates penalties for arrears.

Kiev is not once in 2009 did not fulfill the rule of “take and pay” and never in writing and were warned Gazprom about reduction of volumes of purchases of gas. “However, Russia has never filed a lawsuit against Ukraine for these volumes. Meanwhile, the amount will be more than 10 billion dollars”, – said Simonov. In April 2014, Gazprom estimated the amount of the fine for the shortage of gas in Naftogaz 18.5 billion dollars.

“There is a mirrored contract on gas supply to Ukraine, where the penalties for Naftogaz for gas shortfall clearly spelled out. If Kiev believes that it is necessary to take Russia penalties for reprocheck of gas transit, it means that you pay for the gas. And it turns out wild position: you pay us for reprocheck, and we’re not going to pay for the shortfall,” says Simonov. “Any normal court this position of Naftogaz rejects at times. She’s pitchfork on the water write,” he said.

The cost of transit

The second limitation of the claim of Naftogaz concerns the tariff for the transit of gas through Ukrainian territory to the EU. Naftogaz wants the transit tariff in the contract were changed, and how, he will point out further in the letter indicates Gazprom in its report.

Ukraine makes enough money on the transit of Russian gas. Thus, in 2009 Ukraine has received from Gazprom for about 1.7 billion, and in 2013-m – $ 3.6 billion. However, Naftogaz wants more. Earlier, the Kyiv authorities have stated that the transit rate should be doubled.

Experts of the newspaper VIEW already explained that Gazprom pays for transit of decent price, which is determined by the price formula in the contract. In 2013, the transit rate increased to 3.4 dollars per thousand cubic meters per 100 km Since January 2014 the rate decreased by 9.9% to 2.73 dollar, but from April 2014 it rose again to more than 3 dollars.

Changes are easily explained: the transit tariff depends on the price of gas that Ukraine pays Russia. When the price of gas for Ukraine is reduced (as in the first quarter of 2014), and the rate of transit goes down, and Vice versa.

“Naftogaz pushes himself into a trap, because the formula for transit is tied to the cost of gas for Ukraine. When Ukraine demands of reducing the cost of Russian gas, it should be understood that thereby requires a reduction of cost of pumping. The claim of Naftogaz in gas price is completely contrary to their own claim at the rate of transit”, – says Simonov.

“What there could be lawsuits? The cost of gas for Ukraine was decreased at the request of the Ukrainian side, Gazprom agreed to a compromise, returning the discount of $ 100 on winter package of 30 October 2014. Of course, this automatically led to the conversion of the tariff for transit to the downside. Want an expensive tariff for the transit, then raise gas prices. If you think that the contracts in 2009 is a betrayal of Ukraine, why do you then Tymoshenko was released from prison? Logic in Kiev there is no”, – says the source.

Therefore, if the court will treat the matter adequately, and the first and second paragraph of the requirements for Naftogaz decision in favor of Ukraine will not be accepted, he said.

Two requirements of Naftogaz

Ukrainian state company also requires that the rights and obligations of Naftogaz on transit contract for 2009-2019 were transferred to the operator GTS of Ukraine – Ukrtransgaz (signed the contract of Naftogaz and Gazprom).

Plus, Naftogaz requires to bring the contract into compliance with the energy and Antimonopoly legislation of Ukraine and the European Union, abolishing or rewriting a number of provisions.

Replacement for Ukrtransgaz Naftogaz should not change the main thing – the responsibility of Ukraine on contracts. “If you replace the Naftogaz to another company, for God’s sake. This is not to say that Ukraine does not bear obligations on gas contracts with Gazprom. This Scam will not work”, – said Simonov.

But the requirement to rewrite the transit contract in accordance with the Antimonopoly legislation of Ukraine is not justified. “Why would we do that? What does the internal laws of Ukraine to have international agreement between two commercial companies, one of which is no Ukrainian? What the hell? Then let’s rewrite in accordance with the Russian legislation. We wrote the contract in accordance with international law. Therefore, the arbitration takes place not in Kiev, and Stockholm, Sweden is affected Simonov.

Volodymyr Omelchenko of the Razumkov Ukrainian center also notes that the gas contracts between Russia and Ukraine were written in accordance with the Swedish contract law.

Thus, Ukraine’s chances of victory in a Stockholm court on the claim of transit are extremely small with objective proceedings. In the same way as on the first claim about the allegedly unfair price of gas in the contract for the supply of fuel. “This lawsuit at all surprised by the fact that Ukraine is not paying debts for consumed gas, wants to challenge in court the price for it. So you at least paid for the gas, and then prove in court, and the high price of gas or not,” – says Konstantin Simonov.

In any case, a quick trial in Stockholm is unlikely, although Kiev constantly calls the timing of the court’s decision at the end of 2014, in mid-2015. In the fall of Naftogaz assured that the court’s decision is expected in late 2015. But practice shows that the arbitration be delayed at least two years.

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