Gazprom: transit contract with Ukraine will not be extended

The Russian gas monopoly Gazprom and NJSC Naftogaz Ukraine have not yet begun negotiations on the future of Russian gas transit through Ukraine. Deputy Chairman of the Management Committee of Gazprom Alexander Medvedev stated that presently, there are only consultations on the issue, Interfax-Ukraine reported.

"The current contract will not be extended under any circumstances, even if the sun in the sky or moon changes. The transit contract through Ukraine will not be extended but it does not mean that there will be no transit at all. About two years ago [Russian President Vladimir] Putin requested to hold negotiations on gas transit through Ukraine after expiration of the contract,” he said.

"Ukraine became a member of the European energy space but the requirements to a separate gas transport system have not yet been fulfilled and at the same time, it is unclear on what principles the transit will be organized and what tariff will be. It is impossible to answer the question about the price of the transit now. Ukraine should substantiate economic attractiveness of transit through its territory. There are no negotiations yet; there are only consultations. The outcome could be not only the volume but also transit conditions. Taking into account the shift of the center of our gas production, it is necessary that Ukraine makes its proposal, but it concerns not only rates and volumes of tariffs. There are a lot of economic transit conditions,” Medvedev explained.

At the same time, he stated that Gazprom is ready for negotiations on a new contract. “Arbitration proceedings can not only prevent but also assist these negotiations. The ball is in Ukraine’s court. They should substantiate economic attractiveness and possibility of transit,” he concluded.

On February 28th, the Stockholm Arbitration Court partially satisfied the demands of Naftogaz in the dispute with Gazprom and ruled that the Russian holding company should reimburse the Ukrainian company $4.63 billion for the non-delivery of gas under the transit agreement between them (the court acknowledged that the Russian company supplied gas for transit to Europe in a smaller amount than was provided for in the contract). However, taking into account Naftogaz's debts for gas already supplied, Gazprom will have to pay $2.56 billion. Initially, the Ukrainian company demanded compensation of $ 17 billion in court.

At the same time, the arbitration court rejected Naftogaz’s demands to increase the tariff for gas transit and change the contract with the Russians in accordance with Ukrainian legislation. The court ruled that the provisions of the European or Ukrainian anti-monopoly legislation are not applicable to the contract.

Gas and transit contracts between Ukraine and Russia will remain in effect until the end of 2019.

  Gazprom, gas trasit through Ukraine, Russia