Naftogaz is seeking arbitration against Russia in a US court after it alleged the country has failed to pay the $5bn awarded to Naftogaz previously.
The Hague’s Arbitration tribunal in April ordered Russia to pay $5bn to the Ukrainian state-owned energy company over the wrongful seizure of assets. The case regards Russia’s annexation of the Crimean Peninsula, wherein Russia took control of all Naftogaz assets in the region. The assets include those of six Naftogaz subsidiaries, which are also party to the arbitration.
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Naftogaz filed for arbitration in the US District court for the District of Columbia for enforcement of the deal. They are able to do so as the US is a country that is hosting Russian assets. The filing seeks “recognition and admission” of the enforcement of the payment.
“Since Russia has not voluntarily paid Naftogaz the funds required by the arbitration award, we intend to use all available mechanisms to recover these funds. Now we are working on it in the United States and other target jurisdictions,” said Oleksiy Chernyshov, Naftogaz CEO.
In April, it was reported by Platts that the Russian annexation of Crimea had left Naftogaz’s offshore developments in “limbo”. Prior to the annexation, Ukraine produced around 706.2 billion cubic feet of natural gas per year (bcf/yr). In 2022, the country’s entire productive capacity was almost half that, 392bcf/yr. However, in May, there were signs that the company could be set to increase that. The company drilled a new 5,800m-deep exploratory well, which is producing 580,000 cubic metres of gas per day.
In September 2022, Naftogaz also launched arbitration against Russia’s state-owned oil and gas company, Gazprom, for a similar reason. Naftogaz is seeking payment from Gazprom for the transport of gas through Ukraine, for which Gazprom had not paid on time or in full.
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