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March 9, 2018 www.intellinews.com I Page 2
Ukrainians turn down the thermostat as Russia cuts off gas again
rallied to its calls demand actually fell by 14%, according to the company.
The latest outbreak of a gas war between Gazprom and Ukraine follows on from a deci- sion last week by the Stockholm arbitration court that ordered Gazprom to pay Naftogaz $2.56bn in compensation in a long running row over sup- plies and transit fees and reduced the contrac- tual supplies of gas by Gazprom to 5bn cubic meters (bcm) from 2018.
Gazprom’s CEO Alexei Miller reacted angrily claiming the court was “guided by double stand- ards” and asked why “Ukraine's economic prob- lems are solved at our expense” after the court handed down decisions on both the price and the volume of gas Gazprom should sell to Ukraine. Gazprom says it has applied to the court to end the contract, which expires on December 31, 2019. Naftogaz countered that the contract does not allow for a unilateral termination by one of the parties.
The upshot of the row was Gazprom failed to restart deliveries of gas on March 1 after a nearly three-year hiatus and returned the money Ukraine had pre-paid for that gas. Gazprom said that the renewed gas deliveries were not covered by the existing contract and it would not deliver any gas to Ukraine until a new agreement was drawn up.
Naftogaz claimed the failure to restart deliveries, as per an earlier ruling by the Stockholm court in January, was in breach of the court rulings and also negates “take-or-pay” clauses that re- main in the contract.
“In this situation, the continuation of the con- tracts’ validity is not economically feasible and
unprofitable for Gazprom," Miller said, as cited by Tass.
“Gazprom had to immediately start the proce- dure of the termination of the contracts with Naftogaz on gas supplies and transit at the Stockholm arbitration court,” Miller said in a statement.
The case is likely to now go back to the Stock- holm court for more rulings that could take months if not longer.
The transit contract of Gazprom does not imply an immediate termination of transit when the agreement is broken. In particular, Article 8.2 of the contract explicitly states if the parties dispute delivery deals they have to apply to the Stock- holm Arbitration. "If the parties fail to reach a mutually acceptable solution within 30 days of the occurrence of any dispute or disagreement, any dispute, disagreement or claim in connection with this contract or its violation, termination or invalidity will be finally settled by arbitration in accordance with the regulations of the Arbitra- tion Institute of the Stockholm Chamber of Com- merce, "the text of the agreement says, reports RBC.
The European Union (EU) has been panicked by the prospect of yet another gas war between the two rivals that will leave it freezing again in the midst of winter. Gas wars between Ukraine and Russia always come in winters and the EU has had to deal with previous crises in the winters of 2005-2006 and 2008-2009. Gazprom’s deliver- ies to Europe has been rising steadily and set a new all-time record in 2017 of 194bcm.
“For what it's worth, I am 100% certain Gazprom will not cut gas supplies to Europe. It would be pure suicide. But there'll be more arbitration and more conflict with Ukraine: They cannot be busi- ness partners, it would be too schizophrenic,” columnist Bloomberg Leonid Bershidsky said on twitter, summing up a widely held view.
The EU was fast to react to gas supplies be-