Swedish arbitration court to rule on Gazprom-Naftogaz transit dispute

A four-year dispute between Russia and Ukraine’s state-owned petrol companies over a 2009 contract conclude in Stockholm today.

The court will decide on a claim of some $16 billion put forward by Ukraine’s Naftogaz, which argues that Gazprom underpaid it for its role in transporting Russian petrol to Europe.

It is unclear how the court will rule on today’s case, although the dispute will have far-reaching effects on Russia-Ukraine relations and the transit of Russian petrol to Europe. Indeed, Russia has traditionally used its gas exports as a means of leverage over Ukraine; however, in response to their 2014 breakdown in relations, Kiev has virtually halted petrol imports from Russia, instead purchasing it at a markup from Gazprom’s other customers in Eastern Europe.

Having lost a key means of pressuring its neighbour, Russia may seek to punish Ukraine by using the Nordstream2 pipeline to export petrol to Europe, thereby bypassing Kiev and robbing it of lucrative transit fees.

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