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Ukraine, Russia sign five-year contract on natural gas transit — President Zelensky

Ukraine will receive more than $7 bln from Russian natural gas transit over 5 years, according to the country's president
Ukrainian President Vladimir Zelensky Ukrainian Presidential Press Office via AP
Ukrainian President Vladimir Zelensky
© Ukrainian Presidential Press Office via AP

KIEV, December 31. /TASS/. Moscow and Kiev have signed a five-year contract on the Russian natural gas transit to Europe via the territory of Ukraine, Ukrainian President Vladimir Zelensky stated.

"Ukraine has signed a contract on natural gas transit for the term of five years, in the course of which the country will receive over $7 billion," Zelensky wrote in his Facebook account. "Both sides reserve the right of prolonging the contract for ten more years."

The president stressed that the gas transportation system of Ukraine will be fully loaded, which ensures the energy security and the welfare of the Ukrainian citizens.

Zelensky also said that during the first year of the contract the minimum volume of the transit gas flow through Ukraine’s gas transportation system would total 65 billion cubic meters and 40 billion cubic meters annually in the following four years.

"In fact, we can increase the volume of the gas flow and Europe knows that we will not let it down in terms of the energy security," the Ukrainian president added.

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

The agreements fix the Take or Pay principle; the contract was signed under the European rules of gas transit and Naftogaz of Ukraine is acting as the "transit organizer" in Ukraine, Executive Director of Naftogaz of Ukraine Yuri Vitrenko said. An option for extra transit volume is available with the "greater booking flexibility" and a higher tariff. The Ukrainian side has not yet informed about pricing parameters of the transit fixed in the agreement.

The signed transit package consists of three documents, the press service of Naftogaz informs. This is the interconnection agreement between the Operator of GTS of Ukraine and Gazprom, the transit agreement between Naftogaz and Gazprom fixing terms and volumes of transit for five years and the settlement agreement, whereby the parties drop mutual claims under contracts of 2009.

The transit agreement will make it possible for Ukraine to earn at least $7.2 bln within five years, Vitrenko specified. This amount can grow "significantly" in case of extra transit, he added.

The Russian side also expressed interest during negotiations in resumption of direct gas supplies to Ukraine "subject to gas pricing based on prices of the European NCG," Naftogaz said. This issue and the topic of litigation between Naftogaz and Russia on assets in Crimea are not the subject matter of the package agreement signed, the company said.

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.