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“Tactics raises many questions”: how Naftogaz threatens Moscow with claims during negotiations on a transit agreement

2019-10-29T21:36:44.544Z

Naftogaz is again preparing a lawsuit against Gazprom. This was announced by the executive director of the Ukrainian company Yuriy Vitrenko. Thus, he commented on the next round of talks held on the eve of Russia, Ukraine and the European Commission on the conditions for the extension of transit gas supplies to the European market through the Ukrainian gas transportation system. The current contract expires on December 31. So far, the parties have not been able to work out a compromise for its extension or signing a new agreement. Instead of offering the Russian company favorable terms for cooperation, Naftogaz prefers to blackmail the counterparty with lawsuits, experts say. In their opinion, such tactics contradict both logic and market rules.



Naftogaz is preparing a new lawsuit against Gazprom. This was announced by the executive director of the Ukrainian energy company Yuriy Vitrenko on his Facebook page.

Thus, he commented on the next round of negotiations between Russia, Ukraine and the European Commission on the future transit of Russian gas through Ukrainian territory, held in Brussels.

“There is no agreement. But I didn’t lose time, because I worked on the claims against Gazprom in the new arbitration process, ”Vitrenko wrote.

The Kremlin has already commented on a statement by a Naftogaz representative, as Russian presidential spokesman Dmitry Peskov noted, court claims should not be on the agenda if the parties want to agree on gas issues.

  • Executive Director of Naftogaz Yuri Vitrenko
  • globallookpress.com
  • © Pavlo_bagmut

On the eve of Brussels, the fourth round of trilateral negotiations on the continuation of the transit of Russian natural gas through Ukrainian territory to Europe after December 31, 2019 ended. The Russian side was represented at the talks by the head of the Ministry of Energy, Alexander Novak, and the chairman of the board of Gazprom, Alexei Miller. According to Novak, the consultants were determined to reach a compromise.

“The talks were positive. The next consultations will take place before the end of November. Everyone is set to ensure reliable gas transit from January 1, 2020, ”Novak said.

The opposite assessment of the meeting was voiced by its other participant, deputy head of the European Commission for Energy Union Affairs Marosh Shefchovich. According to the official, he is "disappointed" with the results of the negotiations.

Conversation abscess

Recall that the current contract for pumping gas through Russia to Europe through the Ukrainian gas transportation system ends at the end of 2019. For transit deliveries to continue, Moscow and Kiev must come to a new agreement, negotiations are being held with the participation of a third interested party - the European Commission.

Conservation of transit is important for Kiev. As Naftogaz previously calculated, the Ukrainian side’s profit from pumping fuel reaches $ 3 billion a year, which is 3% of the national GDP.

The first round of negotiations on the extension of gas transit took place in the summer of 2018, but the participants in the consultations were not able to bring the positions closer. The next attempt to agree on a new contract was also unsuccessful.

In the fall of 2019, the parties intensified their attempts to work out a new agreement - the contract should be prepared before the beginning of January 2020, otherwise gas supplies to Europe through Ukraine will be stopped. During the negotiations held in September, Russia proposed Kiev to temporarily extend the current contract, Novak noted.

  • Minister of Energy of Russia Alexander Novak
  • RIA News
  • © Sergey Guneev

This option can be considered if Kiev does not have time to reform Ukrainian legislation by the end of this year, bringing it into line with European standards. The fact is that Kiev has long insisted that gas transit be carried out in the future according to European rules. First of all, we are talking about the application of the Third Energy Package to deliveries through the Ukrainian GTS. According to the rules in force in the European Union since 2009, one supplier cannot use all the gas pipeline throughput capacities. At least half of the free volume of the GTS should remain available to other supplier companies.

Moscow does not object to the extension of these provisions to Ukrainian transit, but is not sure that Kiev will have time to synchronize its legislation with European legislation before the beginning of next year. Earlier, Alexander Novak called for a start in the negotiations on whether the Ukrainian legal standards will be finalized by the beginning of 2020.

“Our position is that if European law is really implemented in Ukrainian legislation by January 1, 2020, we are ready to work in accordance with European law,” the minister said.

For its part, Kiev is in no hurry to show great contractibility, experts say.

So, at the end of September, Naftogaz calculated the transit cost for the next five years, linking prices to the booking volumes of gas transmission capacities of Ukraine. According to experts, the tariffs offered by Kiev are significantly higher than the cost of gas transit from Russia to Europe through alternative gas pipelines.

In addition, Kiev does not agree to the offer of Moscow to extend the existing contract on current conditions. As Ukrainian Prime Minister Aleksey Goncharuk stated at the beginning of October, Ukraine will not agree to the extension of the contract, since it is aimed at signing a long-term agreement.

However, Kiev is clearly not going to fulfill the counter-condition of Moscow. Recall that one of the requirements of the Russian side in the negotiations is the settlement of the lawsuit between Gazprom and Naftogaz in the Stockholm International Arbitration Court.

The subject of the dispute between the energy campaigns was the tariffs for pumping fuel through the Ukrainian gas transportation system. Naftogaz demands to retroactively review transit tariffs, and also accuses the Russian counterparty of not fulfilling the conditions for the volume of gas pumped.

In 2018, the Stockholm arbitration court partially satisfied Kiev’s claims, obliging the Russian company to pay $ 4.673 billion. However, earlier Gazprom won another lawsuit against Naftogaz. As a result, the amount payable to the Ukrainian side was reduced to $ 2.56 billion.

As Gazprom previously specified, it is precisely the refusal of Kiev from claims that can be considered as one of the important conditions for concluding a new fuel transit agreement starting in 2020.

Claims as an argument

According to experts, the claims of the Ukrainian energy company sometimes reach the point of absurdity. So, in early 2019, Naftogaz filed a lawsuit against Gazprom in the Stockholm Arbitration Court with a demand to compensate for the decrease in the cost of the Ukrainian gas transportation system as a result of the laying of gas pipelines bypassing Ukraine in Russia, the lawsuit then reached $ 12 billion.

Recall that the decision to build the Nord Stream-2 gas pipeline was made at the end of 2012. Work on laying a highway from Russia to Germany along the bottom of the Baltic Sea started in 2017 after putting the gas pipeline into operation, the capacity of this route will expand by 55 billion cubic meters. m of gas per year. In total, Russia will be able to supply up to 110 billion cubic meters of gas to all EU trans-Baltic gas pipelines. m of gas per year.

The launch of Nord Stream 2 is scheduled for December 31, 2019. At the same time, the laying of another gas pipeline, through which Russian gas will be able to enter the European market, the Turkish Stream, continues. Its construction was started in 2017, the launch of the highway will also take place before the end of this year.

  • Construction of the Nord Stream 2
  • © Nord Stream 2 / Axel Schmidt

Thus, Gazprom will soon be able to export fuel via alternative routes, significantly cutting or cutting off supplies through Ukraine - this is what is most feared in Kiev, experts say.

The Ukrainian side does not hide the fact that it is seeking guarantees from Moscow that transit will continue under a new long-term contract. For the sake of this, Naftogaz is putting forward new judicial requirements, experts say.

As stated in mid-September, Yuri Vitrenko, Kiev will demand from Moscow "compensation" in the amount of $ 11-14 billion if the parties fail to work out a new contract on conditions suitable for Ukraine. The Ukrainian side plans to recover this amount in an arbitration court, the basis for the proceedings will be the current contract for fuel transit - Naftogaz intends to demand a review of the rates recorded in the document.

In case of transit termination after December 31, the executive director of Naftogaz returns to the topic of “compensation” with enviable regularity. Commenting on October 18 a statement by Gazprom’s management on the need to resolve litigation, Vitrenko threatened to send new claims to the Russian company for more than $ 11 billion on November 1.

  • Reuters
  • © Alexander Demianchuk

A RT source at Naftogaz noted that it was a lawsuit against Gazprom for $ 11 billion due to the cessation of gas transportation through Ukraine.

“Now the goal of Naftogaz is to file as many lawsuits as possible against Gazprom. There is no desire to sit at the negotiating table and, in my opinion, this will only complicate the supply of gas, ”he said.

Under pressure

According to experts, Kiev has chosen an unconstructive tactic in the negotiations and it is little considered that after launching gas pipelines bypassing Ukraine, Naftogaz will have to compete for a transit contract with Gazprom, and not try to dictate its terms.

As the head of the analytical department of the National Energy Security Fund Alexander Pasechnik noted in an interview with RT, although Gazprom offers compromises to the Ukrainian side, Kiev devalues ​​these efforts. Trying to force Gazprom to sign a long-term contract, Naftogaz opposes market factors.

“After the launch of Nord Stream 2 and Turkish Stream, the Ukrainian GTS will lose its significance. From the point of view of logistics and the market, it is possible to preserve some of the Ukrainian transit if Kiev modernizes its gas transportation system and offers the optimal tariff, ”the expert explained in an interview with RT.

According to Pasechnik, in reality Kiev is not very interested in extending European standards to the transit of Russian fuel through its territory, although it declares the opposite. The fact is that in this case, transit will be carried out according to free market rules, which is disadvantageous for the Ukrainian side.

“One does not even have to talk about the effectiveness of the Ukrainian approach to negotiations, since Kiev simply does not listen to other parties. Therefore, negotiations are at an impasse, although Gazprom proposes to remove all claims and work within the framework of European standards. But Naftogaz only accumulates claims. Most likely, the Ukrainian side wants to get some bonuses, ”the expert said.

A similar point of view is shared by the director of the Center for the Study of World Energy Markets of the Institute for Energy Research of the Russian Academy of Sciences Vyacheslav Kulagin. As an expert noted in a commentary on RT, Naftogaz wants to strengthen its negotiations by filing lawsuits.

“The Ukrainian side understands that it is difficult to force the rest of the negotiators to accept its terms, and it is trying to use the threats of filing lawsuits to pressure opponents. This tactic raises many questions, because now Ukraine acts as a seller of services. And any seller must offer potential customers attractive conditions. Instead, Kiev is threatening its future customers. It is strange to wait for progress in this case, ”the expert concluded.

Source: russiart

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