Russia is waiting for evidence of the benefits of gas transit through Ukraine

Russia is waiting for evidence of the benefits of gas transit through

MOSCOW, March 13 (Itar-Tass) – RIA Novosti. Gazprom CEO Alexei Miller and Russian Prime Minister Dmitry Medvedev at a meeting on Tuesday agreed that the future of Russian gas transit to Europe via Ukraine is in its hands – it must offer favorable conditions to compete with other routes. The experts interviewed by RIA Novosti note that the way of supply through Ukraine is the longest and most expensive, therefore, it risks becoming a safety net only for periods of peak winter demand. Opinion: Ukraine’s gas theft has already entered the annals of history
“In the current situation, it is important to note that the Ukrainian side must prove the economic efficiency and expediency of continuing the transit of gas through the territory of Ukraine.” We are ready to listen to proposals, “Miller said. “These are just questions of profitability, effectiveness of the contract,” Medvedev said in turn.
The current conditions are a combination of several factors: the decision of the Stockholm Arbitration, which charged Gazprom with a penalty for gas shortages through Ukraine, the growing demand for Russian gas in Europe and Gazprom’s readiness to start construction of new gas pipelines in the EU – Nord Stream-2 and the continuation of the “Turkish flow”.
The Stockholm arbitration in December and February ruled on the disputes between Gazprom and Naftogaz regarding gas supply and transit contracts, respectively. Naftogaz, which reported a significant shortage of Russian gas for transportation through Ukraine compared to the contractual 110 billion cubic meters per year, achieved compensation in the amount of 4.637 billion dollars. Taking into account the previous decision (under the gas supply contract), Gazprom has to pay less – 2.56 billion dollars.
Gazprom said that these decisions created an imbalance in favor of Kiev, which, on the one hand, appeals against them, on the other hand – intends to terminate the contracts themselves through the same court. On March 5, the Russian company sent Naftogaz official notice of the beginning of the procedure for termination of contracts.
Long and expensive
Gazprom is canceling contracts with Naftogaz, in order, among other things, to avoid future fines for transit through Ukraine in the amount of less than 110 billion cubic meters per year, Miller explained at a meeting with the prime minister. “Gazprom” called the terms for the termination of contracts with “Naftogaz”
“Without a doubt, we expect that in the new proceedings, the Stockholm arbitration will correct the imbalance of interests with Naftogaz,” the head of Gazprom said, noting that the process of canceling the contracts will take a year or two or two. procedures until the end of the contracts in late 2019.
According to experts, the court decision has made gas transportation more expensive for Gazprom and so expensive for Gazprom and, moreover, may induce Kiev to file a lawsuit to increase the transit rate.
“For Gazprom, the transit rate on the Ukrainian route is the highest of all other options for gas supplies to Europe, not only the longest route, but also the most expensive.” In addition, while Gazprom pays at the rate that was indicated in contract of 2009. But the latest lawsuits may prompt Ukraine to file a claim for a revision of the transit rate, “said Sergei Avtosudov, Director General of the National Energy Institute.
“Gazprom” began the procedure for the termination of contracts with Naftogaz, including in connection with the rise in the cost of gas transit through Ukraine, to which the arbitration decision will lead, said Alexei Grivach, deputy general director for gas projects at the National Energy Security Fund.
“According to our estimates, deliveries to Southeast Europe are approximately equivalent when using the Ukrainian route under the 2009 contract and the Northern Stream.” However, the decision of the Stockholm arbitration makes the Ukrainian option more expensive, even if we do not take into account Kiev’s intentions to raise the transit rate, which is already the highest of the existing and planned routes for delivering Russian gas to foreign markets, “he said.
At the same time, experts expect that Gazprom will still have to keep gas transit through Ukraine even taking into account the construction of new gas pipelines to Europe – Nord Stream-2 and the continuation of the Turkish Stream. Such forced transit estimated up to 10 billion cubic meters per year. “One way or another, some kind of contract will be needed, especially the Ukrainian route may be in demand during the winter boot, when all the highways are full,” he explained.
High demand – topical issues
With this frosty winter, Gazprom was able to satisfy all the demands of its European consumers, having set a lot of records on the volume of Russian gas supplies to Europe, Miller told the Prime Minister. Political scientist: in the situation with gas supplies Ukraine behaves in a boorish manner
“Gazprom and Russia have the appropriate capacity to supply gas in such quantities to meet peak demand, an annual rate of 260 billion cubic meters of gas – with the understanding that in 2017, the record year, we delivered to the European market 194 , 4 billion cubic meters, which is undoubtedly our unique opportunity, without a doubt, this is our competitive advantage, “the top manager said.
Gazprom expects high demand for Russian gas in Europe and the coming summer, as stocks in European underground gas storage facilities (UGS) are at a low level after active winter selection, Miller said. “In conditions when … the demand for Russian gas is growing and we see that the peak demand is also growing, of course, the new export gas transportation projects of our Russian gas supply are even more urgent – both the Turkish Stream and the Nord Stream- 2, “Miller said.
Medvedev in response noted that the results of the winter do show a high demand for Russian gas in the European market. “And the volumes of consumption are growing, and this, in fact, makes the task of optimizing gas supplies to the European market, including the projects you mentioned, very relevant,” the head of government said.
Transit risks
Meanwhile, the previous contract between Gazprom and Naftogaz for gas transit through Ukraine continues to operate, and during the period of its dissolution through the court there will be no risks for European consumers, Miller assured, adding: “Unless, of course, there is unauthorized selection from Naftogaz of Ukraine. In the parliament proposed to make a statement against the “Nord Stream-2”
On Monday, Naftogaz’s commercial director Yury Vitrenko said that the Ukrainian company does not intend to take gas from the transit flows as part of debt collection from Gazprom under the decision of the Stockholm Arbitration, but will seek enforcement of Russian gas supplied to the EU countries.
The judgments of the court on contracts for the supply and transit of gas can be called unfair and mutually exclusive, Justice believes. “On the one hand, the contract for gas supply clearly stipulated the rule of take or pay, which the court virtually did not take into account and did not impose fines on Naftogaz.” On the other hand, the gas transit contract did not have a clear obligation to pump at least 110 billion cubic meters of gas per year through Ukraine, but the court charged Gazprom with fines precisely for failure to meet this requirement. “Gazprom basically prove that canceling take or pay is illegal, it is necessary to balance the mutually exclusive decisions of the court,” he said. The US promised to compete with Russia on the gas market of the European Union
However, Gazprom, like Naftogaz, agreed with the signing of contracts in 2009 that arbitration in their disputes will be arbitrated by Stockholm, the expert said. “So far we have what we have, this is an unjust decision, but it is compulsory to execute, of course, we need to appeal and try to reconsider this decision, but so far it is valid.” Now Naftogaz of Ukraine will try to arrest the property of Gazprom in Europe , relying on this decision of the court, “- he clarifies.
The appeal to the court decision on the contract for transit “Gazprom” intends to submit before the end of March. In the case of attempts by Ukraine to arrest the company’s assets, the Russian government will support Gazprom in every possible way, Deputy Prime Minister Arkady Dvorkovich, who oversees the fuel and energy complex, assured journalists.

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