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Stockholm court revokes Gazprom’s obligation under gas supplies deal with Kiev — Naftogaz

The court has fully revoked the "take or pay" requirement under the contract

KIEV, May 31. /TASS/. The Stockholm arbitration court has revoked "take-or-pay" requirement of Russian gas giant Gazprom which was envisaged by the contract on gas supplies to Ukraine, a spokesperson with Naftogaz of Ukraine told TASS referring to the court’s verdict.

"The court has fully revoked the "take or pay" requirement under the contract," the spokesperson said.

According to Ukraine’s Deputy Foreign Minister Elena Zerkal, the court decision also "completely abolished the ban on gas re-export," and "revised the gas price formula since 2014" - it will be tied to the prices in European gas hubs.

In January, Gazprom notified that the company had drew an invoice for the sum of $5.3 bln to Naftogaz for failing to take gas in the second-fourth quarters under "take or pay" condition. In the first quarter of 2016 the "take-or-pay" was not applied to Naftogaz of Ukraine in accordance with the trilateral "winter package". Naftogaz of Ukraine said it was not going to pay $5.3 bln to Gazprom until the Stockholm Arbitration Court brings its verdict. Ukraine has not imported gas under the current contract with Gazprom since November 2015.

In April, Gazprom increased the volume of claims for Naftogaz of Ukraine to $37 bln from $31.759 bln, according to the annual report of the Russian gas holding on the results under the IFRS.

This volume, according to the company, includes the requirements for payment of arrears for gas supplied in May-June 2014, payment on the "take-or-pay" obligation for 2012-2016, as well as late payment for gas.

Gazprom vs Naftogaz

On June 16, 2014, Gazprom appealed to the Arbitration Institute of the Stockholm Chamber of Commerce with a request for arbitration in order to recover the outstanding debt for natural gas and interest on this debt from Naftogaz Ukraine.

On the same day, Naftogaz Ukraine addressed to arbitration with the requirement of retroactive change in natural gas prices, reimbursement of all overpayments that had been made since May 20, 2011 in the amount of at least $6 bln. On July 21, 2014 the two cases were consolidated.

In October 2014, Naftogaz filed a second lawsuit, demanding to oblige Gazprom to pay compensations worth $3.2 bln for the reduction in transit volumes and $3 billion for a low transit rate. On March 14, Gazprom submitted specified requirements to Naftogaz to the Stockholm International Arbitration. The total amount of claims topped $31.759 bln as it included the payment for not taken volumes of gas in Q3 of 2015. Following the move, Naftogaz said it would raise its claims to Gazprom. The official application of the Ukrainian gas company dated August 2, 2016 says the amount of its claims to Gazprom stands at $26.6 bln.