After the Gazprom-Naftogaz arbitration: commerce still entangled in politics
The final decision in the commercial arbitration between Gazprom and Naftogaz Ukrainy, on multiple disputes over their gas supply and transit contracts for 2009-19, was issued late last month. The total claims in the case, which started in 2014 at the Arbitration Institute of the Stockholm Chamber of Commerce, were reported to be higher than $70 billion, making it one of the largest cases ever. Gazprom responded by appealing the decisions, initiating proceedings to terminate the contracts and cancelling the planned resumption of direct imports to Ukraine. This Energy Insight argues that hopes for a managed decline of the Russian-Ukrainian gas trade on a commercial basis, despite the political hostility between the two sides, are not being realised. Commerce has been unable to disentangle itself from politics. Prospects for the 2020s, when Ukrainian transit will still be required, in spite of Gazprom’s transit diversification projects, are discussed.