Ukraine Levies $3.4B Fine On Russia’s Gazprom For Abusing Gas Transit Monopoly

The head of Ukraine’s anti-monopoly watchdog announced Friday it had decided to fine Russia’s state-controlled gas company Gazprom 85 billion hryvnias ($3.44 billion) for abusing its monopoly in the Ukrainian gas transit market. The announcement came just days after the Russian gas giant sent a $2.5 billion bill to Ukraine's state-owned Naftogaz as penalty for failing to purchase the contracted amount of gas in the third quarter of 2015 under a “take-or-pay” clause.

“A decision was just made regarding Gazprom’s abuse of its dominant position on the gas transit market of Ukraine. The fine amounts to 85 billion hryvnia,” Yuriy Terentyev, chairman of Antimonopoly Committee of Ukraine, said in a short Facebook post. He did not, however, provide details of the alleged violations.

The European Union receives nearly 40 percent of its Russian gas imports via Ukraine, and Gazprom is currently the exclusive supplier of gas through Ukraine’s transit pipeline. The Russian company is fighting accusations of overcharging customers and blocking rivals in Eastern Europe, and could potentially face hefty fines if the charges are proven.

Friday’s announcement is only the latest salvo in a festering gas dispute between the two rival nations, marking a further escalation of geopolitical tensions that significantly worsened in 2014 after Russia annexed Crimea and supported separatists in eastern Ukraine.

Most recently, in November, Naftogaz stopped buying gas from Russia, saying it had the capacity to cope with fuel from the EU, given its own sufficient stockpiles and decreased consumption. As a result, Gazprom resumed billing Naftogaz for failing to take delivery of natural gas, taking the total amount the Russian company claims it is owed to nearly $32 billion.

However, Naftogaz rejected the claims, terming the take-or-pay clause “unlawful and void.”