Russian Gazprom and Ukrainian Naftogaz intend to soon sign an agreement on the settlement of mutual claims under the current agreements. It will include the refusal of the parties to new claims and the recall of judicial and arbitration claims, for which no final decisions have yet been made.

Such an agreement was announced the day before by the head of the Russian energy company Alexey Miller. However, he added that the only lawsuit that already has a verdict will be repaid. We are talking about the decision of the Stockholm arbitration, which had previously obliged Gazprom to pay the amount of $ 2.6 billion to the Ukrainian side, however, taking into account the penalty today, the debt is $ 2.9 billion. In addition, the Ukrainian side undertook to withdraw all arrests on property and assets and Gazprom’s cash.

In addition, the Ukrainian government will sign an amicable agreement with Gazprom to withdraw from the Russian company the claims of the Ukrainian Antimonopoly Committee in the amount of 171.9 billion hryvnias, which at the current rate is equivalent to approximately $ 7.4 billion.

  • Naftogaz
  • RIA News

The parties agreed to conclude a new transit contract for a period of five years, during which about 225 billion cubic meters of Russian gas will be pumped through the Ukrainian GTS.

It is specified that in 2020 the volume of transit will be 65 billion cubic meters of gas, and in subsequent years - 40 billion.

The negotiators agreed that if all the agreements are fulfilled, the parties will consider the possibility of direct deliveries of Russian blue fuel to Ukraine with setting a cost based on the price of the European hub NCG “except for a reasonable discount”.

According to the protocol of negotiations published on the website of the Ukrainian Cabinet of Ministers, Gazprom will sign an agreement with Naftogaz on the organization of gas transportation through Ukraine, as well as enter into an inter-operator agreement with the operator of the gas transmission system of Ukraine, which the Ukrainian side undertakes to certify up to 29 December.

“Mutually beneficial solutions”

Recall that on Friday Russia and Ukraine signed a protocol of agreements regarding the continuation of gas transit through Ukrainian territory. This was told to journalists in Gazprom, without disclosing details of the agreements reached.

“The Russian and Ukrainian sides signed a protocol of agreements on the continuation of gas transit through the territory of Ukraine and on the settlement of mutual requirements,” the Russian company said.

Participating in the negotiations, Russian Deputy Prime Minister Dmitry Kozak told reporters that the signing of the contract for a period of five years should take place before the end of December. He specified that it was not a question of extending the old contract, but of concluding a new contract, which would include the volumes of natural gas transit sufficient "to meet the needs of European consumers."

  • Dmitry Kozak
  • © Vladimir Astapkovich / RIA News

“There will be no more lawsuits, judicial disputes, mutual claims,” Kozak emphasized, adding that the negotiations ended “quite successfully.”

“We have found mutually beneficial, mutually acceptable solutions for the Russian Federation and for Ukraine and, most importantly, for European consumers,” said the Deputy Prime Minister of Russia.

The decision of Moscow and Kiev was welcomed by the European Commission. According to the deputy chairman of the EC Marosh Shefchovich, as a result of the agreements reached, Moscow will retain “the status of a reliable supplier for European markets”, and Ukraine, in turn, will remain a “strategic country” providing transit.

The current contract for the transit of natural gas from Russia to Europe through the Ukrainian gas transmission system expires at the end of December. In the event that Moscow and Kiev did not have time before the New Year to agree on the extension of the old treaty or the conclusion of a new one, gas supplies to the EU via Ukraine would stop on January 1. To prevent this scenario, the parties began a dialogue on new transit conditions, while consultations with the participation of the European Commission started back in 2018. The first attempts to reach an agreement were unsuccessful, however, in the fall of 2019, the parties intensified negotiations in a trilateral format.

Of particular importance is the extension of gas transit for Ukraine, which receives about $ 3 billion a year from pumping fuel, which is approximately equal to 3% of national GDP. Such calculations were previously presented at Naftogaz.

However, negotiations were not easy. For example, in September, Naftogaz presented the calculation of new transit tariffs, linking the prices to the booking volumes of gas transmission capacities of Ukraine. The resulting price, according to experts, exceeded the cost of transit of Russian fuel to the European market via alternative routes to Ukraine.

Over the past few years, the Russian-German Nord Stream-2 gas transportation project has been of particular concern to Kiev: the Ukrainian leadership feared that Moscow would stop transit through Ukraine after the pipeline was put into operation. So, in January 2019, Naftogaz even filed a lawsuit against Gazprom with the Stockholm Arbitration Court demanding to pay $ 12 billion in compensation for the reduction in the value of the company's assets as a result of the construction of gas pipelines by the Russian side bypassing Ukraine.

Commenting on these plans, the commercial director of the Ukrainian company Yuriy Vitrenko said that the amount of the claim should cover the losses of Kiev.

“This is just the amount that reflects damage to Ukraine if Nord Stream-2 is built and the Ukrainian GTS capacities are not used,” he stressed.

  • Vladimir Zelensky
  • © Valentyn Ogirenko / Reuters

According to the deputy director of the Institute of History and Politics of the Moscow State Pedagogical University, Vladimir Shapovalov, the signing of a gas transit agreement could be a major event for Russian-Ukrainian relations, which in recent years have been practically curtailed at the initiative of Kiev.

“In this situation, Ukrainian society must correctly understand and comprehend the outcome of this agreement, which means that Russia is an important, key economic partner of Ukraine,” the expert said in an interview with RT.

“Threats and blackmail”

Not only Kiev, but also Washington is opposed to the launch of Nord Stream 2. On the eve of the head of the White House, Donald Trump signed the law on the US defense budget for fiscal year 2020, which also provides for the imposition of sanctions against European companies involved in the construction of the pipeline. According to the US Treasury, the sanctions come into force immediately after the signing of the budget by the head of state.

Thus, the American leadership ignored the protest of Berlin, which had previously opposed the introduction of such sanctions.

According to experts, this move by Washington will seriously affect the climate in US-European relations. At the same time, Moscow’s negotiation tactics are clearly in contrast with the harsh pressure exerted on Europe by the States.

  • Work on laying the Nord Stream 2
  • Reuters
  • © Stine Jacobsen

“Now it becomes clear to Europeans how different strategies Moscow and Washington adhere to. If Russia diversifies gas transit in order to make its supplies more accessible, conducts constructive negotiations with Ukraine on transit, then the States simply use threats and blackmail in relation to their partners in order to achieve their goals. The agreements reached by Moscow and Kiev on gas transit will have a positive effect on relations between Russia and the EU, since the contract will confirm the continuity of gas transit through Ukrainian territory, ”said Vladimir Shapovalov.

A similar point of view is shared by Igor Yushkov, a leading expert at the National Energy Security Fund, a lecturer at the Financial University under the Government of Russia.

“The US decision to impose sanctions and a strict demand to stop the construction of Nord Stream 2 will lead to a great conflict in US-European relations, in particular the relations between Washington and Berlin. But relations between Russia and Europe should improve as a result of the conclusion of an agreement on transit with Ukraine. Europe demanded to continue deliveries through the Ukrainian territory, and now it is clear that Russia does not object to this, although the EU was afraid of the opposite, ”the expert said in an interview with RT.

Shapovalov believes that in the future, the signing of a transit contract will pave the way for a possible agreement on direct gas supplies to Ukraine.

“The very fact that Russia and Ukraine have reached an agreement on transit means that the parties can seek a compromise on important issues. This is a serious step forward against the background of the cold war unleashed by Kiev with Russia, ”the expert emphasized.

This view is shared by Yushkov, in whose opinion, the transit agreement should be considered in a wide context.

“Recent events show that a dialogue between Russia and Ukraine is possible, that with Kiev, although with the mediation of European partners, we can still constructively agree. This emerging trend allows us to cautiously optimistic about the situation with the implementation of the Minsk agreements, ”the expert summed up.