RIA Novosti reported, Ukraine’s energy ministry is going to file a petition to the Stockholm Arbitration court for a revision of its gas contracts with Russia. According to Yuriy Prodan, the Energy Minister, he set about drafting documents as soon as he took office. He added that Ukraine’s government engaged foreign lawyers who had already handled lawsuits at the arbitration court in Stockholm.
Previously, Petr Poroshenko, a candidate for the Ukrainian presidency suggested that the valid gas contracts should be reconsidered. He stated that Kiev should take Russia's natural gas giant Gazprom to arbitration court if Moscow refuses to negotiate over a lower gas price.
Currently, Gaszprom has been supplying natural gas to Ukraine under the conditions settled in January 2009. The price agreement was made between Vladimir Putin and Yuliya Timoshenko as Prime Ministers in force for the time being.
Later on, Ukraine was given two sizable discounts on gas. The first discount was settled by Kharkiv agreement in exchange of the lease extension of the Black Sea naval base in Sevastopol. The second discount was negotiated by Russia’s President Vladimir Putin and Ukraine’s President Viktor Yanukovych in November 2013. Both discounts were still valid during 1Q, 2014. So, the gas price for Ukraine equaled $268.5 per 1,000 cubic meters. However, the price was cancelled by Gazprom. It raised the gas price by a whopping 81% to $485 per 1,000 cubic meters. Gazprom accounts for such a crucial step by Ukraine’s failure to pay.
Importantly, Ukraine was not able to pay off the debt for the gas supplies in March. The debt to Gazprom for March amounts to $550 million, while the overall debt equals $2.2 billion. In addition, President Putin highlighted thanks to discounts and cancelled late payment charges Russia has funded Ukraine’s economy at $35 billion for the last 4 years.
