Russian Gas Supply to EU to Continue Despite New Dispute: Energy Minister

Russia’s Energy Minister Alexander Novak has said that Russian natural gas deliveries to the European Union remain reliable despite the fresh dispute between Russia’s Gazprom and Ukraine’s Naftogaz, Platts reports.

Last week, just hours after an arbitration court had ruled in favor of Naftogaz in a long-running payment dispute between the Ukrainian state company and Gazprom, a fresh gas dispute flared up after Naftogaz said that Gazprom had not stood by its commitment to resume gas supplies, forcing Ukraine to reduce gas usage amid Arctic temperatures.

The new rift comes after years of bitter disputes between the gas companies of Russia and Ukraine, exacerbated by the 2014 Russian annexation of Crimea.

The Stockholm arbitration court ruled in favor of Naftogaz in the payment dispute with Gazprom, ordering the Russian company to pay Naftogaz US$2.56 billion for failing to supply Ukraine with the agreed amount of natural gas over a period of several years and also for failing to pay the full transit fees for the gas it did pump in that direction.

Gazprom’s CEO Alexander Medvedev said the company had received payment from Naftogaz for gas to be pumped its way this month, but had returned it, because the two companies have yet to sign a supplement to their original contract reflecting the court’s ruling. Gazprom expressed its disagreement with the Stockholm arbitration ruling and said that “Gazprom will defend its rights through all means available under applicable legislation.”

The European Commission Vice-President for Energy Union Maros Sefcovic said that “For his part, the Russian Minister of Energy Mr. Novak, gave reassurances that the transit of gas to the EU Member States is not endangered and remains reliable. Regarding the Stockholm Arbitration decision Sevcovic has been informed that Gazprom remains set to terminate its contracts with Naftogaz. This procedure may, however, take some time and will not have immediate consequences on the gas flows.”

On Monday, an EU legal opinion has rejected a European Commission proposal to extend the bloc’s internal energy market rules to regulate Russia’s planned Nord Stream 2 gas pipeline to Germany.

The opinion is a blow to the EU executive’s push to stall Russia’s plan to double the gas it could pump under the Baltic Sea to Germany, bypassing traditional routes via Ukraine. The Commission fears the pipeline would undercut efforts to reduce dependence on Moscow and its support for Kiev.

The opinion, seen by Reuters, from the legal service of the Council of the European Union, the body where EU ministers meet, said applying EU rules to offshore pipelines may breach U.N. law regulating the seas.