KYIV, Nov. 5 - A gas transit agreement between Ukraine and Russia could be signed in the last days of this year, the Ukrainian energy minister said on Tuesday, Reuters reported.
“We are working on different options, it (the agreement) will probably be signed in the last days of December. But we want to agree all numbers, all volumes and other elements of the contract in advance,” Energy Minister Oleksiy Orzhel told reporters.
The comments come days after Naftogaz Ukrayiny, the national energy company, filed a lawsuit seeking to win $12 billion in compensation from Russia’s Gazprom for its refusal to accept market-based natural gas transit tariffs in 2018 and 2019.
The lawsuit is in response to legal claims from the Russian company that in a separate lawsuit seeks to win $6 billion from Naftogaz for ‘unfair’ transit contract obligations. The Stockholm court of arbitration is expected to rule on both lawsuits in 2021.
The legal developments threaten to undermine ongoing European natural gas transit talks between Naftogaz and Gazprom to replace the current 10-year contract, which is set to expire on December 31.
Naftogaz and Gazprom have held several rounds of negotiations on the contract, but the last one, on October 28, failed to make any progress, officials said.
Russia wants to strike a short-term deal while Ukraine is seeking a long-term agreement to guarantee supply to its own consumers.
Kyiv has said it supports the idea of a new 10-year transit contract, with a guaranteed minimum yearly transit volume of 60 Bcm and 30 Bcm of additional flexibility.
Orzhel said that Kyiv hoped that gas talks between Ukraine, Russia and the European Union would continue next week but Ukraine has not yet received the consent of all parties.
Ukraine is one of the main routes by which Russian gas travels to Europe. Moscow’s construction of new pipelines, such as Nord Stream 2 and TurkStream, will cut Russian gas transit through Ukraine to a trickle.
Last year, Kremlin-controlled Gazprom supplied Europe with more than 200 Bcm of gas, of which 87 Bcm went through Ukraine, providing Kyiv with transit income of around $3 billion. (rt/tl/ez)