Ukraine to reduce its claim against Russia's Gazprom if new transit contract is signed

Ukraine’s state-owned oil and gas company Naftogaz will reduce the amount of the new claim against Gazprom from $12 billion to $2 billion if Russian gas monopolist signs a new transit contract, stated Naftogaz CEO Yuriy Vitrenko in Brussels, Ukrinform reports.

"Indeed, the sum of new claims is about 12 billion dollars. Part of these claims is because we do not expect gas transit through Ukrainian territory after 2019... The chances of winning are very high. We have already proven that when we turn to arbitration against Gazprom, we win. We do not turn to arbitration just to waste our time,” Vitrenko stated.

He said that the claim is related to an increase in depreciation of the Ukrainian gas transportation system(GTS) that would surely happen if gas transit is terminated.

"If transit continues after 2019, we would consider the so-called normal depreciation considering that the remaining term of usage of the Ukrainian GTS is about 15 years. But, due to Russia's activities, we cannot expect transit after 2019 at the level that would make us sure that the Ukrainian GTS will be used, and we, according to the international financial reporting standards, should turn to the so-called accelerated depreciation. That is, we should amortize the Ukrainian GTS not for 15 years but take into account the two years remaining to that moment when we have transit,” the representative of Naftogaz said.

If Russia extends the contract and the gas pipeline is used after 2019, an increase in depreciation will not happen, and Ukraine will have no reason to use accelerated depreciation. "In this case, our claim will be not for 12 billion, but only for 2 billion dollars, because 2 billion is the amount of expenditures that are not covered under the current tariffs, even without the accelerated depreciation of the GTS,” Vitrenko said.

Gas and transit contracts between Ukraine and Russia are still active until the end of 2019. In late December last year, then-Chief Executive Officer of Naftogaz Andriy Kobolyev stated that Russia did not guarantee gas transit through the Ukrainian GTS after 2019.

  Naftogaz of Ukraine, Gazprom, Russia, Ukraine, Kobolyev