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Ukraine rules out cutting off Europe-bound gas, but says no contract no transit

November 28/ 08:04

Kiev. Ukraine will never cut off Europe-bound supplies of Russian gas, even if Moscow and Kiev fail to sign a new gas transit agreement by the end of the year, the executive director of Ukraine’s national oil and gas company Naftogaz, Yuri Vitrenko, said.

"Ukraine will not cut off gas. Ukraine has never cut off gas, and this must be understood. We have no tradition of appearing on TV screens and saying: ‘We are cutting off gas now,’" Vitrenko told Germany’s Deutsche Welle.

He said that if Russian gas enters the country’s transit system without a relevant contract signed, Ukraine will pump it into its underground gas storage facilities.

"We will wait for official documents. Only after that the transit operator company will send this gas to wherever the owner with all the necessary documentation wants it to be sent," Vitrenko added.

At the same time, the Naftogaz chief admitted that Ukraine’s gas storage capacities are limited.

"The aggregated gas storage capacity of Ukraine is approximately between 25 to 30 billion cubic meters. Now they hold up to 21 billion cubic meters of gas. But we use this gas, so the capacity will be larger in winter," he added.

On Wednesday, Vitrenko said the gas contract between Russia and Ukraine must be signed no later than December 13. If no deal is reached by that period, "there should be some intermediate decision or some other kind of agreement," he added, without elaborating on what exactly he meant.

Meanwhile, the Ukrainian government on has established a fixed gas price for the current winter season in case a new contract with Gazprom is not signed, Ukrainian Prime Minister Alexei Goncharuk said after a governmental session on Wednesday.

"The current gas transit contract with Russians is expiring, but the negotiations still continue. Some experts believe that if the contract is not signed, gas prices [for consumers] could grow. Today, we made the decision that would protect Ukrainians from influence and consequences of possible gas price fluctuations this winter," he said.

The gas price for individual consumers was fixed at 8 hryvnias per one cubic meter [about $0.3].

"Starting from today, every Ukrainian can join the ‘Guaranteed gas price’ special program, after which his gas bills will be calculated according to the fixed price," he said. "This is the lowest gas price in the past two years."  The program will be voluntary, and citizens are free to decline it, the premier added, told TASS.

In late 2008, Kiev and Moscow failed to complete the a new agreement on the supply of Russian gas to Ukraine. As a result, Gazprom was to stop gas deliveries to Ukraine, but continued to deliver gas to its European consumers through the territory of Ukraine to fulfill its contractual obligations. Naftogaz of Ukraine began to take part of the transit gas, which led to the most serious interruption of gas supplies to Europe in history.

In early 2009, in that emergency situation, the parties signed a contract for gas supplies to Ukraine and transit through its territory to the EU. This contract expires on December 31, 2019. By this time, Russia plans to launch two gas pipelines bypassing Ukraine - the Nord Stream 2 and the TurkStream.

Now Russia, the European Commission and Ukraine have been conducting consultations on gas transit from 2020. However, the dialogue is complicated by the ongoing legal disputes between Russia’s Gazprom and Naftogaz of Ukraine. Moscow offers a "package solution" that includes a settlement agreement on litigation and direct gas purchases at reduced rates. As a fallback, Russia is ready to extend the current transit agreement for 2020.

The next round of trilateral consultations on the transit of Russian gas to Europe through Ukraine from 2020 is to take place in the first week of December.

 

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