GAZPROM AND NAFTOGAZ SIGN MAJOR GAZ TRANSIT DEAL

January 02, 2020

On December 31, 2019, representatives of Naftogaz, Gas Transmission System Operator of Ukraine (GTSOU) and Gazprom have signed in Vienna, 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:
• Interconnection agreement between GTSOU and Gazprom establishing technical procedures and rules for cooperation between the operators of the adjacent networks
• Agreement on organization of transit between Naftogaz and Gazprom setting conditions and transit volumes for the next five years
• 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
• 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.
Gazprom CEO Alexey Miller said:
“Following five days of continuous bilateral negotiations, final decisions and arrangements have been reached in Vienna. At the same time, a whole set of agreements and contracts has been signed, and one can fairly say that these arrangements represent a major package deal that has restored the balance between the interests of the parties.
These documents are coming into effect today, ensuring the transit of Russian gas across Ukraine after December 31, 2019.
Gazprom has done everything in its power, once again proving its reputation as a responsible supplier and a reliable partner.”

(Source: Naftogaz/Gazprom – Image: Naftogaz headqurters in Kiyv)