CEO of Naftogaz of Ukraine Andriy Kobolyev gave an interview to the Nefte Compass (Energy Intelligence Group). Vol. XXIII №43, October 30, 2014.
Ukraine to Press Charges Against Moscow, Naftogaz Chief Says
Naftogaz, the state gas company of Ukraine, is to file a lawsuit against Russia in the next couple of weeks for the expropriation of assets in Crimea, the company’s chief executive officer, Andriy Kobolyev, said in an interview with Nefte Compass in London on Oct. 23. Kobolyev, who spoke earlier at the FT European Gas Summit, also shared his views on the trilateral talks being held with Russia and the European Union to try to ensure that Ukraine has enough gas to see it through the coming winter months.
Q: There were three main points (see box) agreed in the Ukraine-Russia-EU gas talks in Brussels on Oct. 21. Are you confident of reaching an agreement on Oct. 29 when those talks resume?
A: We hope so, but how can we be confident about the decisions of another body? We’re not sure.
Q: Nothing was said about how much gas Ukraine might be able to order, pre-paid, for the period January-March 2015. Was that topic discussed in Brussels?
A: Yes, volumes were discussed. The discussions in Brussels covered the whole winter period; so from October this year to the end of March of next year.
Q: Was anything agreed about the months from January to March?
A: We reached consensus on the volumes that Naftogaz will be able to offtake, and now we need to have those guarantees signed.
Q: Was the consensus in respect of the whole winter period, or just for November and December?
A: The whole winter period. The volume issue is off the table; it’s been decided.
Q: On transit business, the Ukrainian government decided that Gazprom should pay for gas incoming at one border and gas outgoing at the other border - as opposed to paying for distance travelled. Was that issue raised in Brussels and what was Gazprom’s reaction?
A: That wasn’t raised in Brussels. We will deal with that separately.
Q: What have you heard about EU-Russia negotiations about the use of the Opal pipeline in Germany? Will Russia get more access to Europe, if an interim gas supply deal is agreed by Gazprom with Ukraine?
A: As far as I understand, those issues are not interlinked. Opal is an absolutely separate issue which should be decided in accordance with European legislation. Every time we discuss such issues, our position is on a par with the European Union. We believe that no exceptions should made, even for Opal. The more exceptions that are made for Gazprom, the more they use their market power to monopolize certain markets; that leads Europe away from the idea of diversification of supply.
Q: Am I right that Ukraine and Naftogaz particularly want a separate legally binding contract, with Gazprom rather than the energy ministry in Moscow?
A: Yes, with Gazprom as the supplier, the counterparty. We need documents that will be mutually binding and which will give us comfort at the commercial level.
Q: You said just now on the conference platform that an action would be filed against the Russian Federation with regard to expropriation of offshore assets in the Black Sea. Would that be filed by Naftogaz or the Ukrainian government?
A: By Naftogaz. Because it’s Naftogaz that has lost access to certain assets. Maybe there will be also something filed by the government, but that’s not our decision.
Q: You referred to a rumor that the Duma (Russian Parliament) might somehow prevent Gazprom from complying with any eventual ruling by the Stockholm arbitration panel handling the dispute raised by Naftogaz.
A: The Russian Duma recently made a decision which says that Gazprom is allowed to offset the money they should be paying to us for transit against other indebtedness. That is clearly prohibited by the contract. This is where we see a legal collision, where decisions by some authorities in Russia contradict the agreement. The agreement was signed under Swedish law. For Ukraine, and I believe anyone else more or less aware of the rules of the international legal system, you cannot renege on Swedish law because of decisions under Russian law.
Debts: Ukraine would settle its debts based on a preliminary price of $268.50 per thousand cubic meters by making payments in two tranches: $1.45 billion by the end of October and $1.65 billion by the end of the year.
New gas: Ukraine will pay $385/Mcm for gas to be delivered this winter without being subject to take-orpay obligations. The exact volume has not been agreed yet. Russia will deliver the gas following advanced, monthly payments by Ukraine.
Transit fees: Russia guarantees the payment of the transit fees.