Naftogaz returns disputed gas to RosUkrEnergo in exchange for $1.7 billion

"Under documents signed in pursuance of a ruling by the Stockholm Arbitration Tribunal, Naftogaz Ukrainy will return 12.1 billion cubic meters (bcm) of natural gas to RosUkrEnergo," Naftogaz’s press service said in a statement on Monday.

"RosUkrEnergo in turn will repay $1.7 billion in debts to Naftogaz Ukrainy and $810 million in debts to the Gazprom Group," reads the statement.

According to Naftogaz, a package of agreements on the settlement of a number of important issues of interaction in the gas sector was signed with Gazprom and RosUkrEnergo, which made it possible for the parties involved to completely settle all the disputes related to natural gas shipments in 2008-2009.

"The agreements reached will make it possible to preserve Ukraine’s gas balance and ensure the 2010/2011 heating season without attracting additional loans by NJSC Naftogaz Ukrainy," reads the statement.

As reported, Swiss gas trader RosUkrEnergo filed a lawsuit at the Stockholm Arbitration Tribunal, which on June 8, 2010 issued a ruling obliging Naftogaz to return 11 billion cubic meters of natural gas to RosUkrEnergo, as well as pay contractual penalties totaling 1.1 billion cubic meters of gas. Prior to that, the Stockholm Arbitration Tribunal ruled that Naftogaz should pay $197 million to RosUkrEnergo as settlement of disputes between the companies in 2008.

RosUkrEnergo later filed appeals in the Ukrainian courts in order to enforce the Stockholm ruling.

The Supreme Court of Ukraine on November 24, 2010, rejected a cassation appeal by Naftogaz and upheld rulings by lower courts concerning the Stockholm Arbitration Tribunal ruling obliging Naftogaz to return natural gas to RosUkrEnergo.

Naftogaz estimates its spending on the settlement of a dispute with Swiss-based natural gas trader RosUkrEnergo at UAH 9.6 billion in expectation of the repayment of $1.7 billion worth of RosUkrEnergo’s debt assigned under a contract between Naftogaz and Gazprom in 2009.