Naftogaz Ukrainy, Ukraine’s state gas producer and importer, has filed a pre-arbitration claim against Gazprom, calling for the Russian gas giant to pay for booked-but-unused volumes destined for Europe via its gas pipeline network.
“We should try to resolve the issue before arbitration. If we do not resolve it, [we will start] new arbitration,” Naftogaz executive chairman Yury Vitrenko told Kjiv-based news agency Interfax Ukrainy on Friday.
Russian gas flows to Europe via Ukraine have continued, albeit at greatly reduced volumes, despite Russia’s invasion of its neighbour in February.
Tensions between Naftogaz and Gazprom over transit terms increased earlier in May after Ukraine’s transmission authority, Operator GTS Ukrainy, lost control of the key gas entry point at Sokhranivka in the east of the country.
Operator GTS Ukrainy declared force majeure at Sokhranivka and proposed that Gazprom divert gas flows to Europe via the other major pipeline entry point in Ukraine’s northern Sumy region.
However, Gazprom rejected the declaration and has been attempting to send volumes to Sokhranivka.
Naftogaz is concerned that the row between the two companies may increase the possibility of Russia stopping all of its gas transit flows to Europe via Ukraine, and the likelihood of more profound damage to Ukrainian pipeline infrastructure.
Russian gas flows via Ukraine had declined to about 44 million cubic metres per day on Friday, according to Slovak pipeline operator Eustream’s capacity booking data.
A five-year gas transit agreement between Gazprom and Naftogaz calls for a minimum of almost 110 MMcmd of Russian gas to flow through Ukraine to Europe this year, with the Russian company obliged to pay for the booked amount, even if the volumes supplied are lower.
Earlier this week, Vitrenko was quoted as saying that Gazprom has withheld payments related to about 33 MMcmd — the minimum volume contracted for transit via Sokhranivka.
Gazprom had not replied to requests for comment by the time of publishing.
Operator GTS executive director Sergey Makogon said during an interview published on the company’s website that force majeure was declared at Sokhranivka after the operator found it had lost control of the facility’s system, claiming that some of the gas was being diverted to areas of eastern Ukraine under Russian control.
Nord Stream restrictions sought
Makogon said Ukraine will now be calling on Germany to impose restrictions on the flow of Russian gas to Europe via the Gazprom-controlled Nord Stream pipeline running across the Baltic Sea, which is understood to have capacity of 160 MMcmd.
Germany could pass such restrictions without agreement from other European Union members, he said.
Makogon also suggested that such a decision could potentially compel Gazprom to increase transit volumes via Ukraine’s gas trunkline network, which is capable of storing and delivering volumes to European nations including Slovakia, Poland and Germany.
The remaining transit routes under Ukraine’s control are capable of transporting up to 244 MMcmd of Russian gas to Europe.
“If Russian gas transit [to Europe] stays on [in Ukraine], then we have a theoretic guarantee that Russians will not intentionally destroy our [pipeline] infrastructure,” Makogon said.
Read more
- Force majeure declared at Novatek’s European subsidiary
- China to launch trillion-dollar gas pipeline expansion, eyeing more Russian imports
- Poland and Lithuania step forward to halt dependence on Russian gas
- EU poised to impose complete embargo on Russian crude
- OMV writes down Russian assets and continues to study ruble payment demands
