Gazprom to Hit Back at Ukraine with New USD 18 B Stockholm Lawsuit

Energy | June 17, 2014, Tuesday // 11:54|  views

Gazprom CEO Alexey Miller says the ongoing pricing dispute with Ukraine's Naftogaz could pose a threat to European gas supples. Photo by EPA/BGNES

Gazprom is to file a fresh lawsuit in the Stockholm arbitration court against Ukraine's Naftogaz for USD 18 B over prolonged debts, CEO Alexey Miller says.

This is the second court action in Stockholm against the Ukrainian utility in 24 hours after Russia's energy concern announced a USD 4.5 B case against its counterpart for non-payment of billions-worth bills. Ukraine responded by its own lawsuit against the company, citing "overpayment" of gas as a motive.

Miller told TV channel Rossiya 24 that the latest claim is to be lodged in regard to gas quantities that have not been supplied to Ukraine despite having been previously ordered. This is the so-called "take or pay" system, under which Naftogaz carries the obligation to cover its bills for all amounts of gas it has ordered, regardless of whether it requested that they be delivered.

The CEO also commented on the pricing dispute that has erupted between the two companies and the looming gas crisis that some European political leaders and experts are expecting as a result.

Gazprom switched Monday to prepayment of Ukrainian gas after Kiev failed to meet the deadline (June 16, 06:00 GMT) to deliver on its gas debt for November-December 2013 and April-May 2014.

The Russian concern thus virtually halted Ukraine's fresh supplies, but promised that no disruptions of those designated for Europe via Ukraine are in sight.

Despite assurances Miller warned Tuesday that security of supplies could be threatened by the ongoing situation, as the price for Russian gas transported through the Ukrainian territory was tied to the one paid by Kiev.

Miller reiterated that Gazprom stood ready to inject, using its own resources, additional quantities of gas into the EU's storages to prevent any shortages during the winter.

In his view, the construction of the South Stream gas pipeline project could prevent any risks of dwindling supplies to Europe.

Bulgaria, the first EU country through the territory of which South Stream is due to pass over the next few years, has however announced it would freeze activities around the pipeline to heed the EU Commission's calls and remove public procurement and legislation irregularities.

The Bulgarian government, on the other hand, announced Monday it was taking measures to protect itself against a possible gas crisis by pumping additional quantities into the Chiren gas storage facility.

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Tags: Gazprom, Alexey Miller, Ukraine, Naftogaz, Russia, EU Commission, prepayment, Chiren, Stockholm arbitration court, South stream


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