Naftogaz Details Contract Violations

The CEO of Ukraine's Naftogaz has written to his counterpart at Gazprom, detailing recent contract violations and the Russian company's failure to comply with the spirit of a trilateral agreement reached in Brussels.

In a letter to Gazprom's Alexey Miller, Andriy Kobolyev noted that the Russian company has for four days not been complying with the contract between the two companies and with the Binding Protocol signed by Russia, Ukraine and European Commission on October 30, 2014 in Brussels.

The Ukrainian side maintains that since 22 February, Gazprom has only fulfilled approximately 40% of Naftogaz’s daily orders of 114 million cubic meters (mcm).

In its statement, Naftogaz outlines that Ukraine has "painstakingly complied with the Brussels accord,"  covering $3.1 billion of invoices it disputes in court and, since the signing of trilateral agreement, has paid Gazprom over $0.83 billion for the purchase of 2.39 billion cubic meters (bcm) of gas.

Naftogaz stated that Gazprom’s breach of contract as outlined is the reason behind Naftogaz’s decision to suspend prepayments. In accordance with the Brussels agreement, Naftogaz is entitled to make prepayments in full or partially according to the schedule it sees fit.

Kobolyev said that as of February 25, more than 206 mcm of Russian gas supplies to Ukraine remain prepaid and Naftogaz plans to draw down this amount this month.

Gas Metering and Entry Points

In addition to it assertions that Gazprom is not fulfilling its contractual nomination in full, Naftogaz says that Gazprom is supplying gas for Ukraine through unapproved entry points and at which the Ukrainian company has no staff.

Kobolyev indicated that Naftogaz has repeatedly mentioned to Gazprom that gas cannot be supplied to Ukraine through the Platovo and Prokhorivka gas metering stations (GMS), as these facilities are in the areas under military action and Naftogaz does not have authorized representatives at these sites due to safety concerns.

Naftogaz asserts that gas transit to the EU is secure regardless of Gazprom supplies for Ukraine, as the Platove and Prokhorivka are never used as entry points for gas destined for EU and that fighting in areas of Luhansk and Donetsk does not affect the security of gas transit via the territory of Ukraine in any way.