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Contract on Russian gas transit via Ukraine stipulates ‘pump or pay’ principle - Naftogaz

On December 20, Moscow and Kiev announced that a new gas transit contract had been agreed for the term of five years

KIEV, December 31. /TASS/. An agreement between Ukraine's Naftogaz oil and gas company and Russian energy giant Gazprom on the Russian natural gas transit to Europe via Ukraine stipulates a principle of ‘pump or pay,’ Naftogaz Executive Director Yury Vitrenko said.

"The fact that we have signed the contract on the transit under the principle of ‘pump or pay’ for the period of five years is an unordinary event under current conditions," Vitrenko wrote in his Facebook account.

"I would like to point out that it is for the first time in Ukraine’s history, when Gazprom signed a contract on the gas transit under the European principle of ‘pump or pay’," he added.

Vitrenko said the document was signed distantly as he inked the deal on Monday in Vienna after the lunch, while Gazprom CEO Alexei Miller signed it on Monday night in Saint Petersburg.

"We have been holding negotiations with him until late night and hoped that we would sign the contracts together in one place, however, I had to receive approvals from the executive management and the Supervisory Council of Naftogaz as well as from the Cabinet of Ministers in order to sign them," he continued.

"This is why the signing has been postponed and we did it in turns and distantly," Vitrenko said adding that the signing of the document was based on "European regulations" on the natural gas transit and the company is acting as the gas "transit organizer" in Ukraine.

According to Vitrenko, the agreements stipulate "guaranteed volumes" of the natural gas transit supplies (65 billion cubic meters in 2020 and 40 billion cubic meters annually in 2021-2024). There is also an option of organizing additional volumes of gas transit "with a highly flexible system of reservation, which will be charged for at a higher tariff," he said.

Vitrenko has confirmed that the sides concluded a deal on the settlement of court disputes and it stipulates "the withdrawal of all existing appeals and claims on behalf of both sides."

The new round of gas talks between the Russian and Ukrainian delegations was launched in Vienna on December 26.

On December 20, Moscow and Kiev announced that a new gas transit contract had been agreed for the term of five years and that mutual claims between Gazprom and Naftogaz of Ukraine had been settled.

The parties also agreed to waive new and withdraw existing mutual claims. Gazprom also agreed to pay around $2.9 bln to Naftogaz by the year-end under the decision made by the Stockholm Arbitration. Moreover, an amicable settlement was agreed on antitrust proceedings against Gazprom in Ukraine. Last Friday, Gazprom reported that the amount had been paid to Naftogaz.

On Saturday the Ukrainian government approved the signing of the amicable agreement with Gazprom. The document settles the claims of the Antimonopoly Committee of Ukraine against Russia's Gazprom amounting to around $7 bln.