Ukraine’s leaders including Prime Minister Mykola Azarov have stated that Ukraine will bring Russia to the International Court of Arbitration if the two countries cannot reach a deal in their upcoming energy talks regarding the “unfair” price of Russian gas being sold to Ukraine. Prime Minister Azarov stated that his country is “prepared for the consideration of our dispute at the International Court of Arbitration.”
However, Azarov stressed that the two countries will most likely come to a “mutual understanding” as they really want to reach an agreement due to their diplomatic relationship.
The problem started when Russia’s gas giant Gazprom and its Ukrainian counterpart Naftogaz Ukrainy signed a contract that would have Ukraine import gas from Russia.
Currently, Ukrainian leaders are protesting that the price (at approximately 400 U.S. dollars per one thousand cubic metres) is too high and unfair.
The contract allows either party to enter negotiations if certain economic circumstances change (such as a change in the markets) for exactly 3 months so a new price can be agreed on.
If however, the 3 months time is wasted and produces nothing, then either party has the right to bring the case to the International Court of Arbitration.
Talks behind closed doors have been ongoing since mid-2010 concerning this issue as Ukrainian government officials are pressing Moscow for a lower price, somewhere within the range of 250 to 300 U.S. dollars per one thousand cubic metres of gas.
The talks haven’t produced much except worries that yet another gas dispute between Russia and Ukraine may pop up and disrupt Gazprom’s deliveries and supplying of gas to other European countries including Ukraine.
A sub-issue within this issue surrounds the Ukrainian gas pipelines that transport Russia’s gas to the ‘other side’ of Europe. Russia may be looking to swapping a lower price for its gas with a stake in the precious pipelines.
To calm the worries in the market of yet another disruptive dispute over gas, both Russian and Ukrainian officials have promised to work this issue out starting on January 13, 2012 and to also avoid “any further disruptions in the supplying of gas to Europe”.
A similar gas dispute, albeit more about a massive debt to Gazprom, erupted in 2010 between Belarus and Russia when the latter’s Gazprom threatened to cut more than 80% of its gas shipments to Belarus due to Belarus’s massive and unpaid debt of around 200 million U.S. dollars.
(Cover Photo: Neftegaz.ru)