Ukraine Regime Court Declares Russia Owes It $6.8 Billion

Instead of paying the billions Ukraine owes Russia for gas, paying back the 2014 $3 billion loan from Russia, or indeed thanking Russia for decades of investment and subsidies to Ukraine's economy, a regime kangeroo court declared Russia's Gazprom owes Ukraine's Naftogaz $6.8 billion

Tue, Dec 6, 2016
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Gazprom CEO Alexei Miller with Russian President Vladimir Putin in the foreground. Gazprom just got served a $6.8 billion legal claim by the Ukrainian government. (Photo by IVAN SEKRETAREV/AFP/Getty Images)

Okay, so they’re not quite ready to kiss and make up in Moscow and Kiev.

The Anti-monopoly Committee of Ukraine fined  Gazprom  a whopping $6.8 billion, Russia’s Kommersant business daily reported on Monday. The sum includes fines for alleged violations of antitrust laws in the sphere of gas transit by $3.4 billion, as well as penalties for the same amount.

Gazprom is more likely to appeal the decision, but considering the company has already lost all claims on the merits, it is unlikely to change the final verdict. Gazprom does not have any significant assets in Ukraine so it is unclear how the company handles this fine.

Gazprom did not comment on the decision, but in previous statements to the press, the company’s official line is that the fine is illegal. Gazprom has never won a case against it in a Ukrainian court.

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Kommersant reported last January that Gazprom was being cited for violating anti-trust rules in Ukraine. Thanks to the old Soviet system, Gazprom was basically the only game in town and controlled much of the gas transit, which was based on Gazprom suppl and delivery contracts to Naftogaz, their Ukrainian state owned partner.

As Ukraine is slowly trying to reform its energy market, transit conditions are governed by the contract between Naftogaz and Gazprom. These two have been at loggerheads for years. Naftogaz  has a claim against Gazprom price gouging in a Stockholm international arbitration court. The decision on that fight is expected in the middle of next year.

Gazprom argues that it does not control transit, Naftogaz does.

Naftogaz and Ukraine argue that the transit of gas destined for Europe legally belongs to Gazprom, making this a political dispute designed to make it more difficult for Gazprom to play by the old rules of engagement.

The Ukrainian lawsuit may be a hedge against the possibility of losing a dispute with Gazprom in their Stockholm arbitration hearing next year. Should the arbitration panel decide that Naftogaz is obliged to pay to Gazprom, Kiev will be able to immediately to use the anti-trust fine as a bargaining chip. This may come out as a wash in the end.

In July, Gazprom failed to get an appeal to a higher court in Ukraine regarding an earlier Antimonopoly Committee fine of $3.4 billion. The Supreme Court cited Gazprom’s abuse of its monopoly position in natural  gas pricing from 2009-2015.

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