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Russia's Gazprom looks to add latest Ukraine bill to arbitration claim

London — * Naftogaz billed for $5.3 billion on January 17
* Ukrainian company refused to pay ahead of court ruling
* Charge was for unpaid Russian gas in 2016

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Russia's Gazprom has asked that a bill for $5.319 billion sent to Ukraine's Naftogaz Ukrayiny on January 17 be added to its list of claims against the state-owned Ukrainian company currently before the Stockholm arbitration court, Gazprom's press service said Monday.

Gazprom charged Naftogaz for gas not taken in 2016 under the take-or-pay terms of a 10-year gas supply contract signed in 2009 and gave Naftogaz 10 days to pay.

Naftogaz said it would refuse to pay anything to Gazprom until a ruling from the Stockholm court.



With the 10-day deadline now passed, Gazprom said it had requested the new additional amount be considered by the Stockholm court.

"Gazprom will look to have the request met," the service said.

Before the latest bill, Gazprom was claiming some $39 billion from the Ukrainian company, while Naftogaz, in its own claims to the court, was seeking $28 billion from Gazprom, saying it had been overcharged since 2010.

A ruling from the court, which began addressing all of the claims at the end of 2016, is due in June.

If the court considers the latest bill too it would bring Gazprom's claims to more than $44 billion.


TAKE-OR-PAY


Take-or-pay clauses -- where buyers agree to pay for gas even if it is not delivered -- are routine in supply contracts, giving the seller certainty of demand over a particular period of time.

Naftogaz said it repeatedly asked Gazprom in 2016 to supply gas on terms in force in 2014 and 2015, when it signed special amendments to the supply contract.

Naftogaz halted purchases of Russian gas in November 2015, saying it would instead buy gas from European partners, and has bought no Russian gas since.

The Gazprom bill covers undelivered gas for second quarter of 2016 through the fourth quarter of the year, under the take-or-pay rules of the contract, but not the first quarter of 2016, when the take-or-pay obligations were waived under the agreed Winter Package of that year.

According to the take-or-pay terms of the contract, Ukraine is obliged to buy 41.6 Bcm/year of Russian gas, but this amount can be lowered to 33.3 Bcm/year with Gazprom's consent.

According to S&P Global Platts calculations, the amount of unpaid gas in the nine-month period is around 30.6 Bcm, or 111 million cu m/d, given the size of the bill.

Platts estimates that the average price of Russian gas for Ukraine in the Q2 through Q4 period was $173.70/1,000 cu m, based on the formula in the Russia-Ukraine gas supply contract.

The price in Q2 was $178.05/1,000 cu m, in Q3 $168.05/1,000 cu m and in Q4 $175.15/1,000 cu m.

--Stuart Elliott, stuart.elliott@spglobal.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com