Ukraine and Russia Reach 'Agreement in Principle' on Gas Transit

20 December 2019 10:54

During the gas talks that lasted over seven hours, Kyiv and Moscow have reached a preliminary agreement on a new contract for the transit of Russian gas through Ukraine.

This was announced by the European Commission representative at the talks, Maroš Šefčovič, during a briefing on the results of the negotiations that took place in Berlin on December 19.

The details of the agreement have not yet been named, as the parties to the negotiations have to get the green light from the governments in Kyiv and Moscow.

The negotiations are scheduled to continue on December 20 in Minsk with the online presence of the European Commission, Ukrainian Energy Minister Oleksiy Orzhel said. Later, Gazprom confirmed this, according to Interfax.

As a result of the negotiations, no terms of the new transit agreement were announced: neither the term of the contract, nor the volumes of transit, nor the tariff for gas transit. These are the key terms of the agreements, on which, in particular, Ukraine’s level of income depends, as well as the stability in the supply of Russian gas to Europe over the coming years.

During a briefing, the Ministers of Energy of Ukraine and Russia, as well as the representative of the European Commission Šefčovič, refused to answer the journalists' questions.

“We have an agreement in principle. The agreements we have reached will be [further] discussed tomorrow (December 20 — ed.) in the capitals,” Šefčovič said.

This was the first time that the transit talks were held in Berlin. Negotiations between Ukraine and Russia took place without the direct involvement of the European Commission. The parties agreed in a bilateral format at the premises of the Ministry of Economy of Germany. The negotiations were interrupted only by temporary consultations with lawyers and the European Commission.

Ukraine’s negotiating position was to conclude a long-term agreement for a term of 10 years. Ukraine also insisted on Gazprom repaying its debt ($2.56 billion) as per the Stockholm Arbitration decision.

On the other hand, Russia's position in the negotiations was to sign a short-term transit agreement, with a precondition that Ukraine forgoes the award and drops other claims against Gazprom.

The German side was present for the first time in the negotiations. Germany has also been pushing for a long-term transit agreement with Ukraine, as it is being criticized for assisting in the construction of a pipeline bypassing Ukraine — Nord Stream 2 which was sanctioned by the U.S. Senate on December 17.

Two days later, talks on gas transit between Ukraine, Russia and the European Commission began in Berlin.

The current 10-year gas transit agreement expires on December 31, 2019. Every year, the transit of Russian gas to Europe brings Ukraine $3 billion in revenue, which is more than the state spends on gas import.

The previous round of gas transit talks took place in Vienna on December 13 with the participation of top executives of Naftogaz, GTS Operator of Ukraine and Russian Gazprom. According to Naftogaz Executive Director Yuriy Vitrenko, no compromise was reached at the talks.

Vitrenko previously reported that December 13 was the deadline for the conclusion of a long-term gas transit contract, which should take effect from January 1, 2020.

After the Normandy format summit on December 9, President of Ukraine Volodymyr Zelenskyy, following a tête-à-tête with Putin, announced that the new gas transit contract will not be for one year, as Russia had previously demanded.

Recently, a study was published that calculated Russia's losses as seven times greater than Ukraine's in case gas transit through Ukraine were suspended.

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