World, Economy, Energy

Russia's Gazprom pays $2.9B to Ukraine's Naftogaz

Two energy giants expected to sign 5-year Moscow-Kiev gas agreement before end of year

Jeyhun Aliyev   | 28.12.2019
Russia's Gazprom pays $2.9B to Ukraine's Naftogaz


Russia's state-owned energy company Gazprom paid Friday $2.9 billion natural gas compensation to Naftogaz, the national oil and gas company of Ukraine.

"Naftogaz of Ukraine has confirmed receipt of $2.918 billion in compensation from Gazprom in compliance with the 2018 Stockholm Arbitration's award. Thus, in total, based on the results of the [gas] transit arbitration, Naftogaz received $5 billion from Gazprom," the company said in a statement.

The amount paid by Gazprom included payments of the awarded compensation, which was $2.56 billion, and interest accumulated after the announcement of the decision Feb. 28, 2018.

"Naftogaz welcomes the recognition by the Russian side of the need to comply with the 2017-2018 arbitration awards and its intention to continue transporting gas to the EU through Ukraine. The parties continue negotiations on the terms of further cooperation after the current contract [with Gazprom] expires on Jan. 1, 2020," it said.

In 2014, Gazprom and Naftogaz went to an arbitration court in Stockholm for a gas transit contract, where a lawsuit was ruled in favor of the Ukrainian company.

Following months of tense talks and ahead of the looming 10-year gas transit contract deadline, the two ex-Soviet countries last week signed a protocol of agreements on the continuation of transit of Russian gas to Europe via Ukraine.

On Dec. 20, Russia and Ukraine reached an agreement “in principle” on a new gas transit contract, but negotiations on the details will continue, officials said.

The two companies are expected to sign a five-year Moscow-Kiev gas agreement before the end of 2019.

Russia and Ukraine have been at loggerheads since 2014, when Russia annexed Ukraine's Crimea Peninsula after a controversial referendum.

Turkey, as well as the UN General Assembly, view the annexation as illegal.

Ukraine also blames the Kremlin for separatist violence in Donbass, a region in eastern Ukraine that borders Russia.

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