Naftogaz and Gazprom are set to sign a new gas transit deal / eer.ru
This is a five-year agreement on gas transit to Europe via Ukraine, allowing for further extension.
The final round of gas talks has begun in Vienna as Ukraine and Russia are set to agree on a number of documents, in particular, on dropping mutual claims.
The gas contract between Ukraine and Russia may be signed this weekend, President Zelensky's aide Andriy Yermak has told TSN.
As early as this weekend, the parties could ink a five-year agreement on gas transit to Europe via Ukraine, allowing for further extension, which Yermak believes is beneficial for Ukraine.
The term is less than ten years, initially requested by Ukraine, but more than a year, which Russia offered. This is a compromise option, which will allow Ukraine making $15 billion on transit alone, the president's aide underlined.
Ukraine has not bought Russian gas for 1,490 days already. There will be no such item in the new agreement, says Andriy Yermak. At the same time, a clear and transparent gas price formula will be laid down. If Ukraine sees benefits, it will be able to use this option. Now there is no such need, the Office believes.
A lot of criticism came over a decrease in transit volumes. In the first year it will be 65 bcm and further, the volume will be reduced to 40 bcm. "These is a minimal volume fixed, and I hope it will be in fact much higher. Everything that goes beyond the fixed level will go by an even higher tariff," Yermak says.
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Optimism regarding the large volumes is so far inspired by the latest developments around the Nord Stream 2 pipe bypassing Ukraine. Due to U.S. sanctions, so far there are no pipe-laying vessels available to complete the construction along on the Baltic seabed. Experts suggest that the delay may stretch for several years. This means that Ukraine will keep making money off transit. Here, the President's Office admits, Ukraine should thank its international partners: "Without their participation, this would be difficult, or even impossible."
At the same time, Yermak believes, the negotiations were also a milestone for Ukraine in the context of cooperation with Europe or the U.S. Ukraine managed in time to unbundle the GTS, complied with all the recommendations of the European Commission, and, most importantly, avoided another gas war, all of which, the presidential aide says, removed the so-called "Ukraine fatigue."
"We very diligently fulfill our obligations. I think that today our partners really respect us and see us as reliable partners, too" says Andriy Yermak.
Ukraine also took good care of its energy security, Yermak says. The new document details all terms of the contracts. In the event of a possible disruption of the agreements by Russia, Ukraine will be able to appeal in international courts and win litigation. Also, Ukraine will have received by year-end $3 billion, awarded by the Stockholm arbitration in a gas dispute with Gazprom.
"No one knows when we would have gotten this, had it not been for these negotiations and agreements," he says.
In the transit agreement, Ukraine agreed to lift a nearly 7 bln fine imposed on Gazprom by the Antimonopoly Committee in 2016. The opposition immediately criticized the decision, while the President's Office claims the award by the Antimonopoly Committee has hardly brought any benefits yet.
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"Over the course of three years, only a small part has been received by this award. And all the opportunities have been used up for the executive procedure – we've checked," Yermak says.
The prospects for another lawsuit disappeared as Russia will not be halting transit via Ukraine. Had Russia gone for such move, Ukraine could have demanded up to $12 billion in compensation. However, Yermak explains, it would have taken time, again, while the amount of the claim could have changed. Meanwhile, Ukraine would have incurred losses due to the idle pipe. Only in the distant future would Ukraine have gained profit. Therefore, the compromise is justified, Yermak believes: "Strategically, it's a win. These agreements are important precisely today."
However, the Kremlin has pushed through a reservation that the contract shall expire the same year Zelensky steps down. The latter earlier said he would not be running for a second term, which means that the next president will again have to face gas talks with Russia.