Russia’s Gazprom threatens to impose sanctions on Ukraine’s Naftogaz

28 September 2022, 01:05 PM
Gazprom threatens Naftogaz with sanctions because of arbitration proceedings initiated by the Ukrainian company (Photo:REUTERS / Maxim Shemetov)

Gazprom threatens Naftogaz with sanctions because of arbitration proceedings initiated by the Ukrainian company (Photo:REUTERS / Maxim Shemetov)

Russian national gas company Gazprom has threatened Ukraine’s state-owned oil and gas company Naftogaz of Ukraine with sanctions and the suspension of financial operations because of new international arbitration proceedings initiated by the Ukrainian company, Gazprom in a statement on Telegram messenger on Sept. 27.

“Gazprom considers the filing of an appeal by Naftogaz of Ukraine as an unfriendly step and a continuation of the dishonest behavior of the Ukrainian company, and that further attempts by Naftogaz to seek consideration of the dispute in the International Court of Arbitration may lead to the fact that the Russian state authorities have every reason to impose a sanctions regime on Naftogaz and include it in the sanctions list,” Gazprom said in a statement.

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In practice, this will mean a ban for Gazprom to fulfill its obligations to the Ukrainian company regarding the agreements concluded, including the implementation of financial transactions.

In early September, reports emerged that Naftogaz of Ukraine had filed a lawsuit against Gazprom to the International Court of Arbitration, a multi-national body for settling commercial disputes based in Paris, France.

According to Gazprom, in a contract signed with Naftogaz of Ukraine in 2019, dispute between the two under Swedish law should be arbitrated in Zurich, Switzerland.

After many countries imposed sanctions on Russia due to the invasion of Ukraine, Gazprom fears an “unfair trial,” the company claimed.

Gazprom added that “the changed circumstances deprive Gazprom of its fundamental right to a fair and impartial hearing, both in the arbitration itself and in state courts at the place of its consideration.”

The company stressed that services not provided by the Ukrainian side regarding the transit of Russian gas to Europe should not and will not be paid for.

Naftogaz has been preparing for arbitration with Gazprom since May of this year.

In early May, Naftogaz absolved itself of responsibility for gas supplies to Europe, since part of Ukraine’s gas transmission system was seized by the aggressor.

At the same time, Naftogaz CEO Yuriy Vitrenko said the company expects payment from Gazprom regardless of whether the Russian monopolist agrees on changes to fuel transit, or not.

Gas transit volumes from Russia decreased in early May due to the occupation of the Sokhranivka gas measuring station, as well as the Novopskov compressor station in Luhansk Oblast.

Prior to this, up to 32.6 million cubic meters per day of natural gas transited from Russia to Europe through the Novopskov station.

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