Russia's Gazprom to terminate gas contracts with Ukraine

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Gazprom has applied to the Stockholm Arbitration court to terminate its gas contracts with Naftogaz, according to Gazprom CEO Alexey Miller, reports Tass.

To make up for the lack of supplies from Russia, Kiev has suspended lessons at schools, universities and kindergartens until next week, switched power stations from gas to fuel oil and bought extra gas from Poland.

However, Gazprom does not agree with the decision of the Stockholm Arbitration to pay compensation to Naftogaz.

"The arbitrators explained their decision with the sharp deterioration in the state of the Ukrainian economy. In such a situation, the continuation of contracts is economically inexpedient and unprofitable for Gazprom", Miller said.

Andriy Kobolyev has confirmed that Gazprom has returned the March advance payment for the gas supplies, and Ukraine now has no reason to receive gas from Russian Federation.

The Russian gas giant made the decision after the court ordered it this week to pay over $2.5 billion (€2.03 billion) to Naftogaz for failing to deliver an agreed-upon volume of so-called "transit gas".

"We will seek revision of the tariffs", Kobolyev said.

It was reported that it could resume buying gas from the Russian transnational corporation Gazprom in the first quarter of 2018, but this has not yet happened.

Taken into account Ukraine's over-2-billion-dollar arrears to Russian Federation for gas deliveries, Naftogaz is counting on receiving about 2.56 billion dollars from Gazprom, he said.

"The money should be spent on increasing gas production in Ukraine and on investment in improved energy efficiency at the level of consumers in Ukraine".

These issues followed the Stockholm arbitration court ruling Wednesday which found mainly in favor of Naftogaz in the case of a disputed transit contract with Gazprom.

The European Union (EU) has been panicked by the prospect of yet another gas war between the two rivals that will leave it freezing again in the midst of winter.

In the past, rows over the gas prices between Russia and Ukraine resulted in suspension of Russian gas exports to Europe, notably in the winters of 2005-2006 and 2008-2009. Gazprom's deliveries to Europe has been rising steadily and set a new all-time record in 2017 of 194bcm. That's all, it's so easy, " Vitrenko told one of Ukrainian TV channels, answering the question what foreign assets of Gazprom could be arrested for failure to comply with the Stockholm Arbitration. The interest rate for late payment is being calculated, it exceeds $500 000. "However, Gazprom has an opportunity to pay this sum right now from the accumulated funds", Sputnik quoted Dmitry Marinchenko, the Fitch Ratings head of natural resources and commodities, as saying. Transit of Russian gas jumped by nearly 14 percent to 93.5 bcm via Ukraine.

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