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Russia Ukraine Gas Transit Agreement

BUCHAREST (ICIS) – Ukraine and Russia have signed a five-year transit agreement for guaranteed minimum quantities from 2020, naftogaz in Ukraine confirmed late Monday night. These agreements are the culmination of important rounds of negotiations in recent weeks, during which Gazprom committed to pay a US$2.9 billion debt to Naftogaz as part of the Stockholm transit arbitration in February 2018. Naftogaz confirmed receipt of the silver on December 27, 2019. The deal, which comes just 24 hours before the current transit treaty expires on Tuesday, will ease European fears of an interruption to Russian gas supplies. Russia ships about 40% of its European gas supplies via pipelines through Ukraine. The deal, reached just 24 hours before the current deal expired on Tuesday, prevented a possible interruption of Russian gas flow to Europe and helped Moscow avoid a further blow to its reputation as a long-term energy supplier after Russian oil exports to Europe were contaminated earlier this year. The Russian-Ukrainian gas deal comes on a day when the two countries have remained prisoners of the conflict over Russia`s annexation of Crimea and Moscow`s support for separatists in eastern Ukraine. It comes after Seleskyj met for the first time in early December with Russian President Vladimir Putin with the leaders of Germany and France to revive the stalemate in peace talks to end the conflict in Ukraine. Negotiations paved the way for the new gas deal and a prisoner exchange this weekend.

– an agreement between the Ukrainian incumbent Naftogaz and Gazprom, which sets the conditions and volume of transit for the next five years. As part of the deal, Naftogaz will effectively reserve capacity for Gazprom and assume transit-related risks The Russian-Ukrainian gas deals will come at a day when the two neighbors will remain caught up in a bitter struggle that followed Russia`s annexation of Ukrainian Crimea and Moscow`s support for a separatist insurgency in eastern Ukraine. Under the new deal, Russia`s Gazprom, which supplies more than a third of Europe`s gas needs, would use an agent to reserve the transit of 225 billion cubic meters (bcm) of fuel through Ukraine over five years. In the past, Kiev and Moscow have repeatedly quarrelled over gas prices and transit fees, so European consumers are sometimes cut off from an important energy source. However, Ukraine will lose its historic role in transiting Russian gas to Southeast Europe and Turkey. Earlier this month, Gazprom agreed to pay about $2.9 billion to Ukraine`s Naftogaz to settle a long-standing dispute over transit fees. The package of agreements signed on December 30, after five days of continuous negotiations in Vienna, provides that “the (signed) documents are in force from today and provide for a transit of Russian gas through Ukraine after December 31, 2019.” The European Union feared that Russian deliveries via Ukraine would be suspended if the current agreement expired without a new agreement. The final agreement on the transit of Russian gas to Europe via Ukraine was finally sealed after the two countries agreed on the protocol in December. . . .