KIEV, November 19. /TASS/. The Kiev government has rejected as inadmissible the proposals put forward by Russia’s energy giant Gazprom to extend the current contract for gas transit via Ukraine or sign a new one, Ukrainian Energy and Environment Minister Alexei Orzhal said.

"The proposal that we had just received [from Gazprom] is inadmissible for Ukraine, considering that we should withdraw from arbitration court processes and sign a treaty [valid] only for one year," the minister told Ukraine’s ICTV channel on Monday night.

However, the minister added that "mutual understanding can still be reached," hinting that Kiev was ready for compromises if a long-term contract to transport significant volumes of gas is singed.

Orzhel said it was possible that Russia would try to continue its gas transit starting from January 1, with no contract signed.

"We will treat this as smuggling. And this will entail different judicial proceedings," he said.

The current 10-year contract for the transit of Russian gas through Ukraine expires at the end of this year. By this time, Russia plans to launch two gas pipelines bypassing Ukraine - the Nord Stream 2 and the TurkStream. Ukraine, in turn, has obligations to introduce European energy legislation by the end of the year.

Gazprom submitted an official proposal to Naftogaz of Ukraine on extending the current or concluding a new contract for gas transit through Ukraine for one year, the company’s press service said earlier on Monday. In addition, Gazprom is awaiting the position of the Ukrainian side regarding its readiness to directly purchase Russian gas starting from 2020.

Russia is ready to conclude a transit contract according to European rules, if Ukraine has time to complete all the necessary procedures. As a fallback, the Russian side proposed to extend the current contract for 2020. In addition, Russia is ready to resume gas supplies to Ukraine, which were discontinued in 2015, at a price reduced by 25%.

The proposal says that necessary conditions for extending the existing contract or concluding a new agreement include both parties abandoning all mutual claims in international arbitration and terminating all litigation; cancelling the decision of the Antimonopoly Committee of Ukraine to impose a fine on Gazprom for alleged ‘violation of economic competition’; and withdrawing Naftogaz’s petition ‘to initiate an investigation by the European Commission against Gazprom.’.