Russia's Gazprom announces termination of all contracts with Ukraine

Against the backdrop of a defeat in the gas dispute with Ukraine heard by Stockholm Arbitration, Russian gas monopoly Gazprom moved to kick off the procedure for the termination of contracts for transit and purchase of gas earlier signed with NJSC Naftogaz of Ukraine.

"Gazprom is forced to immediately launch the procedure for the termination of contracts with Naftogaz of Ukraine for the supply and transit of gas in Stockholm Arbitration," the Russian company said in a statement published on Facebook.

Read alsoUkraine mulls gas consumption cuts in face of Gazprom's latest moveAccording to Gazprom CEO Alexei Miller, the Russian company resorted to such steps after seeing the Stockholm Arbitration award.

"The Stockholm Arbitration, guided by double standards, adopted an asymmetric decision on contracts with Naftogaz of Ukraine for the supply and transit of gas," Gazprom said, adding that the arbitration decision significantly violated the balance of interests of parties under these contracts, and is forcing Gazprom to solve Ukraine's economic problems.

"In such a situation, retaining contracts is economically inexpedient and unprofitable for Gazprom," the press service added.

As UNIAN reported earlier, on February 28, Naftogaz received the final decision of the Stockholm Arbitration ordering that Gazprom pay Naftogaz $4.63 billion.

Following the consideration of the two cases (another one – on gas purchase), Gazprom owes the Ukrainian company $2.56 billion, while the Ukrainian company owes nothing.

Read alsoUkraine's energy crisis response plan in action: Switching from natural gas to boiler oil

After seeing the court's decision, on the morning of March 1, Gazprom refused to supply gas to Ukraine in March 2018. At the same time, the Russian company has already received an advance payment from Ukraine.

Naftogaz has called such behavior by Gazprom a violation of the Stockholm Arbitration award. Moreover, according to Ukrtransgaz, Ukraine's state-owned gas transmission system operator, there has not been a single day that Gazprom observed a contractual demand to maintain the necessary level of gas pressure at the entrance to the Ukrainian GTS.

Read alsoNaftogaz seals win in Stockholm arbitration dispute with GazpromThe Cabinet of Ministers of Ukraine introduced for a 5-day term a national action plan to prevent energy crisis over the actions of the Russian monopoly, which, among other things, provides for the transfer of generating companies from gas to boiler oil, as well a shut-down of educational facilities until March 6.

On March 1, Naftogaz CEO Andriy Kobolyev proposed to introduce a restriction on gas consumption on March 3-4 due to the freezing temperatures across Ukraine and the Russian Gazprom's refusal to supply gas to Ukraine from March 1.

Speaking at the meeting of the National Security and Defense Council, he said that due to a rough winter chill, a record daily gas consumption of 200 million cubic meters is being observed, with 18 million cubic meters of gas becoming a deficit, which could have been covered by gas supplies from Russia.

Kobolyev noted that this deficit will be partly covered by gas purchases at high prices from the European direction, adding that Gazprom would be billed for them later as a result of non-fulfillment of contract.

"At the same time, we still believe that approximately 10 million cubic meters of gas per day will be the expected deficit, which we cannot now cover," said Kobolyev.