The decision of the Stockholm Arbitration reduces the price of Russian gas for Naftogaz of Ukraine by $ 20 to $50 per thousand cubic meters, in comparison with the old formula price, as stated by the chief commercial director of Naftogaz, Yuriy Vitrenko on ICTV channel
“A price under the new contract will be significantly lower than the old formula price. Now the difference is about 20$. However, this amount will fluctuate depending on the season, for example, in the second quarter the difference will be 50$. The reason is that the market price for gas falls during a warm season. Previously the formula was connected to oil products and didn’t reflect market trends in Europe,” said Vitrenko.
Vitrenko noted that by taking into consideration the arbitration decision, now the price of Russian gas for Naftogaz is 20-30$ less than the cost of the gas bought on the German market because the transportation is not included.
According to him, the arbitration decision obliges Naftogaz to purchase 4 billion cubic meters of gas from Gazprom under a take-or-pay contract in 2018. These supplies can start in March.
“The Stockholm Arbitration decision is based on the principle that we must purchase half of our annual import needs from Russia,” Vitrenko added.
In May 2017, the Stockholm arbitration court fully met the demands of Naftogaz against Russia’s Gazprom regarding the take-or-pay contract beginning 2009. The court ruled to change the take-or-pay clause of the contract and cancelled the restriction on re-export of the gas by Ukraine. Naftogaz is entitled to receive compensation because of overpayment for gas in the fourth quarter of 2017 and 2015. But Gazprom will be able to receive an additional payment for gas delivered in the second quarter of 2014.
Gazprom said that they won’t appeal the decision of the Stockholm Arbitration court.
The arbitration decision on the transit contract is expected to be made on February 28, 2018.