Ukraine's Naftogaz will go after Gazprom assets in Europe

Ukraine's state-owned energy firm Naftogaz will go to court to try to seize Gazprom's assets in Europe after the Russian energy firm failed to make a payment ordered by an international tribunal, Naftogaz's deputy chief said on Monday.

Gazprom is refusing to pay Naftogaz more than $2.5 billion under a Stockholm arbitration ruling meant to conclude a long legal battle that has run alongside Ukraine's broader political stand-off with Russia.

"For us it's clear that they won't do that [pay] so we will start arresting their gas and other assets of Gazprom in Europe, not in Ukraine. We will go to courts in Europe," Naftogaz's chief commercial officer Yuri Vitrenko told Reuters in Brussels.

However, Naftogaz will not seek to seize Russian gas transiting through Ukraine to European clients, he added, saying, "We don't want to create any kind of political ambiguity here in the EU that Ukraine is not a reliable transit country."

Gazprom is appealing against the Stockholm ruling and is seeking to cancel a 2009 gas transit contract with Ukraine, escalating a dispute which the European Union says could threaten gas flows.

Naftogaz said it expected talks with Gazprom later this week to be the last before it files fresh complaints with the Stockholm arbitration tribunal. Among other issues, it wants compensation for Gazprom's refusal to supply gas this winter.

The EU and Western clients had hoped the Stockholm arbitration would resolve one of the many thorny disputes between Kiev and Moscow. Instead, the two sides are raising the stakes amid tricky discussions over future gas transits through Ukraine when the current contract expires at the end of 2019.

Vitrenko said it was likely Gazprom would entirely halt gas flows through Ukraine, re-routing them through two major new pipelines to the north and south.

"It is absolutely likely that in 2020 there will be no transits through Ukraine and Gazprom will be okay in terms of meeting their minimal contractual obligations," he said.

"We know that Mr Putin wants to punish Ukraine, and that's why he will do it."