Naftogaz intends to dramatically reduce the tariff for Russian gas transit beginning in 2020

NJSC Naftogaz of Ukraine plans to significantly reduce tariffs on natural gas transit after the expiration of the contract with the Russian company, Gazprom, in 2019, as stated by the Group Chief Commercial Officer of Naftogaz, Yuriy Vitrenko, in an interview with the DPA news agency which was published on Monday, May 1st, Deutsche Welle reported.

"Starting in 2020, the tariffs will reduce to nearly one tenth [of the current], and this will make transit through the Ukrainian gas transportation system much cheaper than through Nord Stream 2, Vitrenko said. He criticized the plans for the construction of Nord Stream 2 as economically unjustified.

At the same time, reducing the rate of gas transit through Ukraine requires a guaranteed annual volume of roughly 110 billion cubic meters of gas, DPA notes. According to official data, 43.8 billion cubic meters of Russian gas was delivered to Germany via the Nord Stream gas pipeline in 2016. The pipeline at almost 80% of its capacity. Ukraine fears the decreased importance of its gas transportation system into Europe after construction of the Nord Stream 2.

Last year, Russia transported in total, 82.2 billion cubic meters of gas to the EU through Ukraine. At the same time, the Ukrainian gas transportation system was at almost 56% of its capacity. This provided, according to Vitrenko, revenues of about 1.8 billion euros.

In addition, Naftogaz hopes to receive billions in compensation from Gazprom. Soon, the Stockholm Arbitration Court will announce a verdict on the mutual claims of Naftogaz and Gazprom regarding the 2009 contract. The Ukrainians are requesting that Gazprom to pay the remainder for gas transported as well as compensation for not having used the minimum transit volume as stipulated in the contract.

  Ukraine, Naftogaz, Gazprom, gas transit