Hungary's Emfesz lodges EU complaint against Ukraine

Hungarian company Emfesz has turned up the heat in the gas standoff by lodging a complaint with the EU against Ukraine and Naftogaz, the Ukrainian state oil company, for a breach of supply agreements.

Emfesz, an independent gas supplier, alleges that because Naftogaz has failed to deliver Russian gas to Hungary via Ukraine, or release any from its underground stores, it has incurred losses in the region of 10m dollars.

Under a council trade barrier regulation dating back to 1994, EU industries can lodge complaints with the commission on obstacles to trade.

A spokesman for Emfesz told theparliament.com on Friday, “We have suffered commercial losses due to the fact that some state-owned companies did not fulfil their commitment to deliver the gas passed to them for Emfesz - the gas that we own in Ukrainian storage.”

Emfesz has a strategic supply agreement with RosUkrEnergo - a jointly owned Ukrainian/Russian agent that sells Central Asian gas to Naftogaz - and recently acquired Ukrainian oil and gas developer Ukrnadraservice.

Emfesz itself is owned by Ukrainian businessman Dmitrij Firtas, who is also part-owner of RosUkrEnergo.

The complaint was first lodged on Thursday by Wolf Theiss, lawyers contracted by Emfesz, but it is not expected to be translated from the original Hungarian for a couple of days.

The legal argument revolves around a clause in the 1998 energy charter treaty, an international agreement signed by Ukraine, which holds that any state-owned company should uphold its obligations under the treaty, including ensuring reliable cross-border energy transit.

The complaint will trigger an investigation by the commission, which could result in the EU entering into a formal dispute settlement procedure under international trade rules.

Emfesz, the second biggest natural gas importer to Hungary, has also filed a suit against Naftogaz in a Hungarian court, and expects other countries in the EU to follow its lead. “I’m sure we won’t be alone in this,” the Emfesz spokesman added.

All of this comes just ahead of a special energy council on Monday, which will look at ways to resolve the dispute. The Czech EU presidency confirmed on Thursday that a deal had been reached with Moscow and Kiev to allow independent monitors to supervise the flow of gas from Russia via Ukrainian pipelines.

The gas standoff dates back to New Year’s Day, when Russian oil giant Gazprom cut off supplies to Ukraine, saying it owed Gazprom more than 2bn dollars.

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