October 20, 2016

Ukraine fines Gazprom $3.5 bln, cites abuse of gas transit monopoly

The head of Ukraine’s competition authority said on Friday that the watchdog had decided to fine Russian gas company Gazprom 85 billion hryvnias ($3.5 billion) for abusing its monopoly on the Ukrainian gas transit market.

The decision by the Ukrainian regulator is the latest chapter in a long-standing gas conflict between the two countries, resulting in a sharp fall in Russian supplies to Ukraine.

“A decision has been taken in relation to the abuse of the monopoly on the transit market … by Gazprom as a monopoly buyer. The amount of the fine is 85 billion hryvnia,” Yury Terentyev said in a post on Facebook.

The watchdog gave no details of the violations and Gazprom, the exclusive supplier of gas through Ukraine’s transit pipeline to European consumers, was unavailable for immediate comment.

Gazprom this week said that Ukraine owes the company $2.549 billion for gas supplied in the third quarter of last year and that the money should be paid within 10 days.

The company’s claim includes money said to be owed under a take-or-pay clause in the supply deal.

Ukraine’s state-owned Naftogaz responded by calling the clause “unlawful and void”.

Gazprom’s claim followed Naftogaz’s decision to impose a 50 percent-plus increase in transit fees for exporting Russian gas across its territory to Europe.

The European Union receives about 40 percent of its Russian gas imports via Ukraine.

Gazprom and Naftogaz have taken their dispute to an international arbitration court in Stockholm, with Gazprom’s total claims against Ukraine currently standing at $29.2 billion.

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