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Kiev expects Naftogaz and Gazprom to hold gas transit talks soon

The current transit contract between the companies expires on January 1, 2020

Gazprom office Marina Lystseva/TASS

Gazprom office

© Marina Lystseva/TASS

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KIEV, July 24. /TASS/. The talks on gas supplies and gas transit between Ukraine and Russia are possible in the near future, Andrei Gerus, a representative of the President of Ukraine in the government, said on Wednesday.

Speaking at a government meeting, the official touched upon a possible halt of gas transit due to expiration of the gas transit contract in January 2019. He noted that "some new agreement may be signed."

"I think, we can expect negotiations on gas transit between Naftogaz and Gazprom, between the Ukrainian and Russian sides, in the near future. But so far, as of today, the transit contract ends on December 31," Gerus noted.

The current transit contract between Naftogaz and Gazprom expires on January 1, 2020. Trilateral gas talks are currently underway between Ukraine, Russia and the EU. The next round is expected to take place in September.

In June, Gazprom CEO, Alexei Miller said that Ukraine would not be able to sign a new gas transit contract under the EU law until the end of the year. According to him, "the ship has sailed," but Gazprom is ready to extend the existing contract, which "should be economically viable for the Russian side."

At the same time, according to Miller, Ukraine should think in the first place not about the extension of the Russian gas transit through the territory of the country, but about its own gas supply. The head of Gazprom noted that the likelihood of starting negotiations with Ukraine from scratch is "above zero." The talks can begin as soon as a new government is formed in Kiev.

Today, the balance in gas relations between Russia and Ukraine has been broken by the decision of the Stockholm arbitration, he said.

Stockholm legal dispute

Gazprom and Naftogaz of Ukraine plunged into a litigation over gas supplies and transit contracts back in 2014, as administered by the Arbitration Institute of the Stockholm Chamber of Commerce. Gazprom is demanding more than $37 bln from the Ukrainian company for gas under the take-or-pay clause for 2012-2016, for gas supplied in May-June 2014 and in compensation for gas debts.

The two contracts signed in 2009 by Gazprom and Naftogaz on gas supplies to Ukraine and on gas transit through the country to Europe will expire at the turn of 2019-2020.

On February 28, 2018, the Stockholm Arbitration Court handed down a final decision on the dispute between Gazprom and Naftogaz regarding the contract on gas transit via Ukraine, ordering the Russian company to pay $2.56 bln to Naftogaz of Ukraine. Gazprom challenged these decisions and sought complete cancellation of the ‘transit’ decision.

According to the preliminary schedule, the appeal of Gazprom against the arbitration decision on gas supplies is planned for review in October 2019.

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