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Ukraine Plans to Contest Russian Gas Contracts in Stockholm Court

RIA Novosti

13:53 11/04/2014

KIEV, April 11 (RIA Novosti) – Ukraine is preparing to file a case in a Stockholm court on the country's gas contracts with Russia, Ukrainian Minister of Energy and the Coal Industry Yuriy Prodan said Friday.

"This work has been in progress since my first day on the job. We are thoroughly working on the documents to reconsider the unfavorable conditions stipulated in the 2009 contracts between Ukraine's Naftogaz and Russia's Gazprom," Prodan told journalists.

The minister added the government effort will involve international lawyers experienced in such matters.

Petro Poroshenko, a Ukrainian oligarch and presidential candidate, has called on Kiev authorities to apply to the arbitration court in Stockholm if Russia declines to review the gas contracts.

Serhiy Sobolev, the leader of the Batkivschyna (Fatherland) faction in parliament, likewise claimed Kiev has grounds to review the clauses of the contract in court.

The 2009 gas deal was brokered by then-Prime Minister Yulia Tymoshenko, who was later jailed and charged with abuse of power stemming from the agreement.

Kiev has been failing to meet its gas debt payments required by its contractual obligations, and as a result, beginning April 1 Russia raised gas prices for Ukraine to $385 per thousand cubic meters, a 44 percent increase. At the beginning of April, Gazprom CEO Aleksey Miller ended another $100 discount Kiev enjoyed under the 2010 Kharkov Agreement, raising the price to $485 per thousand cubic meters.

Debt owed by Ukrainian state gas company Naftogaz for Russian gas deliveries has been mounting in recent months. At the end of last year, the total stood at $1.45 billion, increasing in the past two months by nearly $800 million.

Despite the fact that a discounted price still applied last month, Ukraine did not pay a cent to Moscow, Russian President Vladimir Putin said Thursday.

"Russia cannot and should not unilaterally bear the burden of supporting Ukraine's economy by providing discounts and forgiving debts; and as point of fact, using these subsidies to cover Ukraine's deficit in its trade with EU member states," Putin said in a letter sent to 18 European heads of state.

Putin also called on Russia's European partners to participate in the effort to stabilize the Ukrainian economy on an equal basis, as a unilateral approach will not be effective.