Naftogaz, GTSOU and Gazprom signed a set of agreements to ensure Russian gas transit over the next five years

31.12.2019, 23:59:00

Today, representatives of Naftogaz, Gas Transmission System Operator of Ukraine (GTSOU) and Gazprom have signed a set of agreements to continue Russian gas transit through Ukraine until 2024 inclusive.

This result was backed by a systemic effort of Naftogaz team in preparation of Ukraine to the negotiations as well as the imposition of the US sanctions related to Nord Stream 2 project.

The package includes the following documents:

1) interconnection agreement between GTSOU and Gazprom establishing technical procedures and rules for cooperation between the operators of the adjacent networks;

2) agreement on organization of transit between Naftogaz and Gazprom setting conditions and transit volumes for the next five years; and

3) settlement agreement between Naftogaz and Gazprom according to which both parties abandon mutual claims under the 2009 contracts.

The three agreements have been signed to fulfill the protocol of the 19-20 December meeting in Berlin in Minsk.

The protocol included the following provisions:

- USD 2.918 billion compensation paid by Gazprom under the Stockholm Arbitration Awards of December 2017 and February 2018 and received by Naftogaz on 27 December 2019;

- withdrawal from all arbitration proceedings where final decisions have not been rendered yet;

- lifting attachment from Gazprom’s property, assets and monetary funds and refusing from any future claims and proceedings under the contracts signed in January 2009; and

- minimal transit volumes: 65 bcm/year for 2020 and 40 bcm/year for 2021-2024.

The issue of gas supply was not subject to the package agreements. Naftogaz noted Gazprom’s interest in resuming gas supply to Ukraine in future with the pricing based on the NCG price.

The package deal also does not affect Naftogaz Group’s claims against the Russian Federation regarding the assets seized in Crimea.

The concluded agreements will provide Ukraine with guaranteed revenues from gas transit over the next five years. The certainty of future gas transit creates a necessary environment for continuation of the domestic gas market and broader energy reforms, secures gas transmission jobs and future contracts with Ukrainian industrial producers related to the maintenance of the Ukrainian gas transmission system.

“The agreements that have been signed today are a result of an acceptable compromise. The major outcome of the negotiations is that we have received almost USD 3 billion from Gazprom, and ensured that the Ukrainian system will be able to operate without a loss over the next five years. The transit won’t be interrupted, and will be performed by the independent certified operator. We have demonstrated Ukraine’s reliablility as a transit partner for the EU. Our team is grateful to the European Commission for its consistent position and certifying that the Ukrainian GTS is reliable and efficiently managed. We are also grateful to the US for their firm support of energy security in Europe,” Naftogaz CEO Andriy Kobolyev said.

Communications Department
NJSC Naftogaz of Ukraine