Ukraine reject Gazprom’s contract proposal

Russia’s Gazprom yesterday officially proposed to Ukraine extending the current gas transit contract, which expires at end-2019, by one year or signing a new one-year contract. Gazprom also offered dropping financial claims against each other as a necessary condition for an agreement. This includes the disputes in the Stockholm international arbitration, as well as the decision of the Ukrainian anti-monopoly authority to fine Gazprom. Ukraine won USD2.6bn compensation from Gazprom in Stockholm last year, after which it filed another claim for USD12bn regarding gas transit.

The issue of mutual claims has been the main stumbling block in the trilateral negotiations involving the EU on gas transit after Dec 31. Yury Vitrenko, the executive director of Naftogaz Ukrainy, flatly rejected Gazprom’s official proposal last night. He said, speaking on ICTV that Ukraine would lose if it dropped financial claims, even if Gazprom offered good discounts. EC Vice President Maros Sefcovic suggested yesterday that gas could be discussed at the upcoming Normandy-format summit, scheduled in Paris for Dec 9. But Vitrenko rejected the idea of discussing gas trade there, and he said it was a Russian idea. Energy minister Oleksy Orzhel, who also spoke on ICTV, reiterated that Ukraine could do without Russian gas transit even if no agreement were reached. Orzhel said Gazprom’s proposal was unacceptable.

The next round of the Ukraine-Russia-EU gas talks is expected at end-November. Russian needs Ukrainian gas transit, but wants to avoid long-term commitments, given the expected launch of two new pipelines bypassing Ukraine. For its part, Ukraine hasn’t been buying gas from Gazprom since 2015, but it doesn’t want to lose Russian gas transit as a lucrative business and a means to diversify gas supply.

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