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Agreement with Naftogaz includes withdrawing claims, arbitration decision payment

Gazprom CEO Alexey Miller said that Gazprom and Naftogaz will sign an agreement on settlement of mutual claims under existing contracts

MOSCOW, December 21. /TASS/. The agreement between Gazprom and Naftogaz includes waiver of new claims, revoking claims, payment under the Stockholm arbitration decision, Gazprom CEO Alexey Miller told reporters.

"In accordance with the protocol on gas cooperation, Gazprom and Naftogaz will sign an agreement on settlement of mutual claims under existing contracts, thus balancing the interests of the parties," Miller said.

He added, "The settlement agreement includes waiver of new claims, recalling arbitration and legal claims in which there are no final decisions, payment under the final decision of the Stockholm arbitration."

Gazprom representative noted later, the company could pay Ukraine about $2.9 bln, which must be done before December 29.

Following the results of gas negotiations in Minsk on December 20, the Russian and Ukrainian parties signed a protocol on gas transit and claims settlement.

In 2009, Gazprom and Naftogaz signed two gas contracts. One concerned the supply of Russian gas for the needs of Ukraine, and the second concerned the transit of Russian gas to Europe through Ukrainian territory. Both contracts were calculated until December 31, 2019. However, from November 2015, Kiev did not purchase Russian gas at all, replacing it with reverse gas from Europe. In 2014, companies began litigating both contracts at Stockholm Arbitration.

In November 2014, Naftogaz appealed to Stockholm arbitration with a request to recover from Gazprom about $17 bln for the short supply of agreed volumes for transit, as well as to review the tariffs and conditions for the transit of Russian gas through Ukraine. In February 2018, the Stockholm court made a final decision: to pay Naftogaz about $4.7 bln as part of a transit case. Thus, taking into account satisfied counter requirements, Gazprom has to pay Naftogaz $2.56 bln.

In March 2019, Gazprom challenged the arbitration decision and announced its intention to terminate gas contracts with the Ukrainian state company through court.

At the same time, Naftogaz several times tried to obtain payment of $2.56 bln from Gazprom by seizing the assets of a Russian company in other countries.

On June 16, 2014, Gazprom filed a lawsuit to recover debt for gas from Naftogaz under a supply contract, while the Ukrainian holding filed a lawsuit to review the price. The claims of Naftogaz in the framework of this trial amounted to over $14.23 bln.

In May 2017, the court issued an interim (separate) decision on some issues of the gas supply case, which Gazprom contested. According to the final decision (May 2018), the court confirmed Naftogaz’s debt to Gazprom for gas deliveries in the amount of $2 bln in 2013-2014. The arbitration also recognized the "take or pay" condition, but reduced the mandatory annual volume of purchases Gazprom has from 52 bln to 5 bln cubic meters before the contract expiration at the end of 2019.

Gazprom challenged the final decision of the court. An appeal hearing on the interim decision took place in October 2019. The court on November 27 rejected the appeal of Gazprom. Appeals hearing of the final decision were scheduled for February 2020.