Gazprom returned to Ukraine

The gas corporation has started negotiations with the Ukrainian Naftogaz about a new transit contract since 2020.
Gazprom and Naftogaz began discussing the terms of a new contract on the transit of gas through Ukraine to Europe. Two persons close to the parties to the talks reported this to Vedomosti. And it is not a question of revising the existing contract until the end of 2019, but of the terms of transit from 2020, Vedomosti interlocutors say. The question of the continuation of transit after 2019 was raised several weeks ago, during a meeting of representatives of both companies, the interlocutor close to Naftogaz knows. "Contacts on the period after 2019 began," - confirms another interlocutor of Vedomosti. What transit conditions are discussed, the interlocutors did not specify. Negotiations are at the earliest stage, follows from the words of one of them. "We asked [Gazprom] the question what [in their understanding] means" attractive commercial conditions, "- says the source close to the NAC. But the Russian side has not yet given a clear answer, he adds.

What is the dispute about

Between Gazprom and Naftogaz there are two contracts - on gas supplies to Ukraine and on the transit of raw materials through its territory to Europe. Both were signed on January 19, 2009 and are valid until the end of 2019.

On March 2, Gazprom announced that it intends to terminate the agreement ahead of schedule, as Naftogaz notified.

 The fact is that during the time of contracts, neither Naftogaz nor Gazprom has fulfilled its obligations once. Ukraine did not buy out the obligatory "take or pay" 41.6 billion cubic meters. m of gas per year. "Gazprom" has never pumped 110 billion cubic meters prescribed in the contract. m of gas per year.

Since mid-2014, the mutual claims of the parties under both contracts have been the subject of proceedings in the Stockholm Arbitration. In December 2017 the arbitrators decided on direct deliveries, reducing Naftogaz's obligations by more than 10 times. On February 28, a verdict was issued on the transit contract. The arbitrators did not change the obligation to transit gas by Gazprom, and they remained in full force until the end of 2019. In terms of decisions, Gazprom is obligated to pay Naftogaz compensation in the amount of $ 2.56 billion in the past years and pay the transit cost for 2018-2019 worth about $ 4.7 billion.

The Ukrainian company did not show any desire to change anything. "Arbitration [if it comes to the termination of contracts through Stockholm] will last for years," - said the chief commercial director of Naftogaz Yuri Vitrenko. "Nothing will happen, the contract will continue until the end of 2019," he added.

What will be negotiated?

Gazprom was outraged by the verdict of the arbitrators and announced its intention to terminate both contracts. A corresponding notice was sent to "Naftogaz" in early March.

The volumes of transit along the "Ukrainian route" and its cost is one of the main causes of the conflict between the companies. In the summer of 2015, the very fact of the extension of the contract after 2019 caused the doubt. The new one will not be concluded under any circumstances, even if the Moon becomes the Sun, said Alexander Medvedev, deputy chairman of the Gazprom board. "Gazprom will necessarily hold talks on its extension, Miller said at the time, but the problem is that Ukraine offers unacceptable conditions. Among other things, Naftogaz insisted on increasing the transit fee by almost two times (from $ 2.7 to $ 5 per 1,000 cubic meters per 100 km).

However, since 2014, the situation on the European gas market has changed significantly. The fall in Europe's own production allowed Gazprom to significantly increase supplies. In 2017, Gazprom exports to non-CIS countries reached a record of 194.4 billion cubic meters. m (almost 50 billion cubic meters more than in 2014). The share of the Russian company in the European market was 35%. And Gazprom believes that this is not the limit.

Almost half of the deliveries are about 93 billion cubic meters. m of gas - was on the Ukrainian route. Even the construction of two new export gas pipelines - "Nord Stream -2" and "Turkish Stream" - will not allow us to export so much without extending the transit contract with Ukraine. And it is not important to operate in this sense with the total design capacity of the Nord Stream-2 and Turkish Stream (86.5 billion cubic meters) or the peak capacities of physical daily supplies. In addition, the December accident at the Baumgarten hub once again confirmed the need to have reserve export capacities.

Without Ukraine can not do without

After the completion of the construction of new pipes at the end of 2019, Gazprom sees precisely such a reserve as the Ukrainian transit. Regular deliveries along this route can decrease almost 10 times - up to 10-15 billion cubic meters. m gas per year, said in early April Miller. "The Russian resource base is shifting to the north, and in the central gas transport corridor, there will simply not be resources in the previous volumes," he said on April 10. In addition, the cost of transporting gas via the Nord Stream-2 pipeline will be at least a third lower than the Ukrainian route, Gazprom said.

Ukraine, in turn, is interested in preserving the transit of gas through its territory to the maximum extent possible. The goal of construction of bypass gas pipelines, primarily the "Nord Stream-2", in an interview with German Handelsblatt, the President of Ukraine Petro Poroshenko called "the introduction of an economic and energy blockade of Ukraine". First of all, we are talking about the loss of payment for transit. Under the agreement of 2009, it was $ 2.35 billion for 110 billion cubic meters. m.

For several years, the position of Naftogaz in disputes with Gazprom is actively supported by Poland and the Baltic countries. Representatives of the European Commission repeatedly stated about the need to preserve Ukrainian transit in "sufficient" volume. April 10, German Chancellor Angela Merkel publicly announced the need to preserve the transit of gas through Ukraine for the first time. "I made it clear that the Nord Stream-2 project can not be realized without clarity regarding the future transit role of Ukraine," Merkel said at a joint news conference with Poroshenko in Berlin. "It is clear that this is not only an economic issue, but there are also political considerations," Reuters quotes her. Earlier, the position of official Germany was that the construction of a new trans-Baltic pipeline is an exclusively commercial project.

"We never raised the issue of refusing Ukrainian transit," Miller retorted on April 10.