Russia's Gazprom pays $2.9B to Ukraine's Naftogaz

Gazprom said Naftogaz of Ukraine has confirmed receipt of $2.918 billion in compensation from Gazprom in compliance with the 2018 Stockholm Arbitration's award.

Gazprom logo is seen on a gas processing column under construction at Amur gas processing plant, part of Power Of Siberia project outside the far eastern town of Svobodny, in Amur region, Russia November 29, 2019.
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Gazprom logo is seen on a gas processing column under construction at Amur gas processing plant, part of Power Of Siberia project outside the far eastern town of Svobodny, in Amur region, Russia November 29, 2019.

Russia's state-owned energy company Gazprom paid on Friday $2.9 billion natural gas compensation to Naftogaz, the national oil and gas company of Ukraine.

"Naftogaz of Ukraine has confirmed receipt of $2.918 billion in compensation from Gazprom in compliance with the 2018 Stockholm Arbitration's award. Thus, in total, based on the results of the [gas] transit arbitration, Naftogaz received $5 billion from Gazprom," the company said in a statement.

The amount paid by Gazprom included payments of the awarded compensation, which was $2.56 billion, and interest accumulated after the announcement of the decision February 28, 2018.

"Naftogaz welcomes the recognition by the Russian side of the need to comply with the 2017-2018 arbitration awards and its intention to continue transporting gas to the EU through Ukraine. The parties continue negotiations on the terms of further cooperation after the current contract [with Gazprom] expires on January 1, 2020," it said.

In 2014, Gazprom and Naftogaz went to an arbitration court in Stockholm for a gas transit contract, where a lawsuit was ruled in favor of the Ukrainian company.

Following months of tense talks and ahead of the looming 10-year gas transit contract deadline, the two ex-Soviet countries last week signed a protocol of agreements on the continuation of transit of Russian gas to Europe via Ukraine.

On December 20, Russia and Ukraine reached an agreement “in principle” on a new gas transit contract, but negotiations on the details will continue, officials said.

The two companies are expected to sign a five-year Moscow-Kiev gas agreement before the end of 2019.

Russia and Ukraine have been at loggerheads since 2014, when Russia annexed Ukraine's Crimea Peninsula after a controversial referendum.

Turkey, as well as the UN General Assembly, view the annexation as illegal.

Ukraine also blames the Kremlin for separatist violence in Donbas, a region in eastern Ukraine that borders Russia.

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