Head of Ukraine's Naftogaz believes termination of Gazprom’s contract was Kremlin’s decision
Naftogaz CEO Andriy Kobolyev expressed the opinion that Gazprom’s decision to terminate its contracts with the Ukrainian company originated in the Kremlin.
“The decision to refuse to perform the contract was not made by Gazprom. I believe that it was made in the Kremlin,” Kobolyev said in an interview with The Wall Street Journal.
According to Kobolyev, Russia reduced the pressure on the gas pipeline for transit to Europe by 20%. The pressure deficiency forced Ukraine to use electric power to support the transit. “There is no risk for Europe,” Kobolyev said, “We will do all we can to ensure that the artificial crisis which Russia has tried to create does not come about”.
On Saturday March 3 at an arbitration court in Stockholm, Gazprom began the process of terminating its contracts with Naftogaz on the supply and transit of gas. The supply, which was expected to continue until the end of 2019, was supposed to be renewed in March.
Earlier the Stockholm arbitration court ruled that Gazprom must pay Naftogaz $4.63 billion for the gas supply deficit between 2009 and 2014 according to the transit agreement. According to another case at the same court, the Ukrainian company has to pay Gazprom $2 billion for the gas already supplied (Gazprom demanded $56 billion, but the court took into account the sharp deterioration in Ukraine’s economy). Thus the Russian company owes Naftogaz $2.6 billion.
According to Gazprom representative Alexey Miller, the arbitration court’s ruling violated the balance of interests between the parties on the two contracts, and as a result it would be economically inexpedient and unprofitable to keep the contracts in force.
On Friday March 2, Ukrainian Energy Minister Ihor Nasalyk announced that a crisis plan was being brought into effect, which would switch the power plants to fuel oil. However, the following day Ukrainian President Petro Poroshenko said that the critical situation had passed, since Kyiv had been able to increase the gas supply from Poland, Slovakia and Hungary.