20:09 GMT04 August 2020
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    In February 2018, the Stockholm Arbitration Court ordered the Russian gas giant to pay Naftogaz some $2.56 billion over its alleged failure to ship agreed-upon amounts of gas through the Ukrainian pipeline network en route to Europe. The dispute became a part of the broader conflict between Russia and Ukraine in the wake of the 2014 coup in Kiev.

    Gazprom has completed a $2.9 billion payment to Naftogaz on the basis of the ruling of the Stockholm Arbitration Court, a spokesman from the Russian company confirmed Friday.

    According to the spokesman, the payment was made in accordance with terms and dates agreed upon in the protocol signed between the two companies last week. Under the terms of that agreement, following Friday's payment, the companies will agree to waive their claims in any other outstanding legal disputes which have yet to be resolved.

    Earlier Friday, Russian Energy Minister Alexander Novak announced that starting from 1 January, Gazprom and Naftogaz would wipe the slate clean regarding whatever mutual disputes they've had on the issue of gas supplies and transit contractors. This includes the removal of asset freezes. According to Novak, future commercial agreements between the two side would be "economically mutually beneficial and acceptable to both sides".

    Russia and Ukraine signed a protocol last Friday envisioning the delivery of 65 billion cubic metres of gas through the Ukrainian pipeline network next year, with an additional 40 billion cubic meters per year guaranteed between 2021 and 2024. In addition, the agreement allows for direct gas deliveries to Ukraine at a discounted price on the basis of the country serving as a hub for deliveries to Europe.

    A picture shows a pressure gauge at a compressor station of Ukraine's Naftogaz national oil and gas company near the northeastern Ukrainian city of Kharkiv on August 5, 2014
    © AFP 2020 / SERGEY BOBOK
    A picture shows a pressure gauge at a compressor station of Ukraine's Naftogaz national oil and gas company near the northeastern Ukrainian city of Kharkiv on August 5, 2014

    The gas protocol was signed in Minsk after an agreement in principle on gas transit through Ukraine was agreed upon by senior officials from Russia, Ukraine and the European Union in Berlin last week.

    Russian officials have expressed eagerness to resolve the dispute with Ukraine as the Nord Stream 2 pipeline system moves closer to completion. Nord Stream 2's European partners, and particularly Germany, have lobbied Moscow to continue deliveries of natural gas through Ukraine, which has earned billions of dollars in revenues via its status as a transit state in previous years.

    The Russian-Ukrainian gas conflict is part of the broader political conflict between the two countries stemming from the February 2014 coup d'etat in Kiev. Gazprom halted its exports to Ukraine in late 2015, citing Kiev's failure to make payments on time. Naftogaz challenged this claim and took its case to the Stockholm Arbitration Court, which ordered Gazprom to pay the Ukrainian company $2.56 billion. Russia challenged the ruling in the months that followed, but gave in last week in the interests of a broad agreement. During this time, Ukraine was forced to purchase reverse flow gas from Slovakia, Poland and Hungary, with these supplies often consisting of Russian gas sold by these countries to Kiev at more expensive prices.

    Tensions between Russia and Ukraine have subsided in recent months as both countries have sought to address a long list of issues which accumulated under the administration of vehemently anti-Russian former Ukrainian President Petro Poroshenko, who was soundly defeated by his rival, Volodymyr Zelensky, in last spring's elections.

    Also on Friday, the Russian Energy Ministry confirmed that Nord Stream 2 would be launched before the end of the year, notwithstanding US legislators' recent attempts to stop the project. Once completed, Nord Stream 2 will double the existing Nord Stream network's capacity to 110 billion cubic meters of gas per year. The pipeline network runs from Russia to Germany via the bottom of the Baltic Sea.

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