Archive for May 31st, 2017


Tymoshenko’s “take or pay” gas disaster seemingly righted in Stockholm

May 31, 2017

Over the past few years every reader will be aware Ukraine and Russia have been at war.  War not only in eastern Ukraine where people still die on a daily basis, but also diplomatically, socially, culturally, and economically.

A small part of that war has been the claims and counterclaims between Gazprom and Naftogaz in the legal arbitration machinery of Stockholm relating to the 2009 scandalous/ruinous/disastrous 10 year gas deal negotiated and signed by former Prime Minister Yulia Tymoshenko and Russia in 2009.

Affairs are not yet over in Stockholm.  Several judgments are in whilst others, such as those relating to transit, are yet to be delivered.

Perhaps most importantly for Ukraine, it appears the arbiters threw out entirely the claims relating to the “take or pay” clause under which Gazprom was claiming $47 billion (plus $35 billion in interest.)  This is by far the vast majority of Gazprom claims against Naftogaz.

Further the re-export ban on Gazprom supplied gas was also lifted in its entirety.

The headlines will be, perhaps rightly, filled with figures in the $ billions that Naftogaz Ukraine is no longer liable for due to the stupidity of Yulia Tymsohenko when Prime Minister.   It lifts a long and dark shadow from Ukrainian gas supply for the future, giving Kyiv more leverage to simply discard any such clauses if muted, should thee nation ever decide to consume Russian gas again (perhaps with the cynically added proviso that Yulia Tymoshenko is allowed nowhere near any future negotiations).

As already stated there are yet further rulings to come – which Ukrainian may or may not win, but are certainly more manageable in $ numbers than those cast asunder by the Stockholm rulings of 31st May should it lose.  If it were to win, it may actually be in a position whereby it is owed albeit however questionable it is that payment would be forthcoming.

However, what will be under-reported, is what really matters to Ukraine looking forward is not only money.

What really matters for the future are the nation’s statutory domestic and European 3rd Package obligations – and the ability to meet them.  In short a European modeled, functioning gas market within the framework of closely approximated principles and regulation.  Something somewhat hobbled by the Tymoshenko gas deal that was not due to conclude until 2019. and something that Gazprom/The Kremlin will certainly be severely irked by.

A reader may now ponder what, if any statement Yulia Tymoshenko will make as a result of the ruling handed down.

Whatever the case, money aside, Ukraine has now to insure it meets its domestic and European obligations regarding its gas market.  There is now one less excuse.

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