Russia has been ordered to pay Ukraine’s state oil and gas company Naftogaz Ukrainy $5 billion in compensation for assets lost by the Russian annexation of Crimea in 2014, following a ruling by an international arbitration tribunal in the Netherlands.
Naftogaz said on Thursday that if Russia refuses to pay the compensation, it will enforce the Permanent Court of Arbitration’s ruling in countries that hold Russian assets, citing the 1958 United National Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Russian presidential spokesperson Dmitry Peskov said the Russian government “will study the court’s ruling and decide upon its next steps”, according to Moscow-based news agency Interfax.
Naftogaz and its subsidiaries filed a claim in October 2016, initially seeking damages of $10 billion, together with accrued interest for the loss of assets.
The main asset was the Noftogaz regional subsidiary in Crimea, Chernomorneftegaz, which produced about 1.6 billion cubic metres per annum of gas from several onshore and offshore fields in the Black Sea area.
It also operated an underground storage facility on the peninsula and two modern jack-up rigs that had been contracted to help boost offshore gas production in the shallow waters of the Black Sea.
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After Russia’s annexation of Crimea, the assets were taken over by the new regional administration installed by Moscow.
In February 2019, the court ruled in favour of Naftogaz. Russia, which had initially refused to participate in hearings, appealed the February 2019 ruling. However, the Hague Court of Appeal confirmed the ruling in July last year.
Earlier this week, the Swedish Presidency of the European Union Council said in a statement that it aims to enable frozen Russian assets to be used in the reconstruction of Ukraine following Russia’s invasion of its neighbour last year.
The initiative is being led by Sweden’s National Board of Trade director general Anders Ahnlid, who was appointed as heads the working group following a meeting of the European Council.
The working group is aiming to gather a clearer picture of where Russian state-owned assets are located outside the country and their total value, such as the estimated $300 billion of Russian Central Bank assets are frozen in G7 nations, including EU member states.
Naftogaz executive chairman Alexei Chernyshov revealed in March that the company may report a full-year loss of about 40 billion hryvna ($1.05 billion) for 2022, as the ongoing war with Russia takes its toll on the company’s operations and finances.
On Monday, Naftogaz acknowledged that a group of investors had rejected its sweetened debt-restructuring offer, failing to bring the company out of a months-long default on its corporate bonds.