The arbitration arises under Contract No. KP dated January 19, 2009 (the “Contract”), a 10 year, long-term gas sales agreement between Gazprom and Naftogaz for volumes ranging from 40 to 52 billion cubic meters of gas per year. On the basis of the statements released by the parties, it appears that Gazprom will be alleging a debt claim. Naftogaz appears likely to invoke the price review provisions and seek a decrease in price. The value in dispute is in excess of US$4.5 billion.
To resolve the dispute, the tribunal will likely need to consider the price review provisions in the Contract. Pricing terms and price review provisions are confidential and rarely disclosed. However, Ukrainskaya Pravda — a Ukrainian news outlet — purported to publish the terms of the Contract when it was agreed. Assuming that the Contract published by Ukrainskaya Pravda contains the price review provisions that are relevant to the current arbitration between Naftogaz and Gazprom, the tribunal will be required to interpret some unusual terms.