By Swann Bigot, legal expert and author, founder of the platform Eurasia Business News – December 31, 2019

Gazoduc - Pixabay

Gas pipeline – Source : Pixabay

The Russian Gazprom and the Ukrainian Naftogaz signed in Vienna on December 30 a new gas transit contract and agreements settling their legal disputes, reported the Chairman of Gazprom Alexey Miller.

The decisions and final agreements were reached after five days of continuous bilateral negotiations in Vienna, Austria. Alexey Miller said that the documents provide for the gas transit from Russia through Ukraine after December 31.

Gazprom and Naftogaz, after long discussions in Berlin and Minsk, agreed on December 20 on the terms of settlement of their dispute by arbitration rendered in Stockholm as well as on the volumes and conditions of transit of Russian gas to Europe via Ukraine from January 2020.

Following these agreements the arbitration and legal claims of the companies against each other are definitively closed.

In addition, both companies agreed to waive all possible future claims regarding the transit and delivery contracts dated January 19, 2009.

Naftogaz confirmed on December 27 that it received the USD 2.9 billion payment from Gazprom, as agreed in Minsk on December 20. This amount was awarded by arbitration rendered in Stockholm in December 2017 and February 2018.

An irrevocable settlement agreement was concluded between Gazprom and the Ukrainian Ministry of Justice, which provides for the termination by Kyiv of all current and possible future claims against the Russian company, before the Antimonopoly Committee of Ukraine.

Read also : Gazprom and Naftogaz agree on gas transit to Europe

The Ukrainian antitrust proceedings against Gazprom had implied a USD 7.4 billion fine, for abuse of monopoly position in the natural gas transit market in Ukraine.

Gazprom and Naftogaz also signed an agreement on the organization of gas transportation from Russia through the Ukrainian territory. At the same time, Naftogaz is the transit organizer and holds the related risks.

A transport agreement was concluded between the Operator of the Gas Transmission System of Ukraine (OGTSU) and Naftogaz. Gazprom also signed an inter-operator agreement with OGTSU. The organizing company will have to book a volume of 225 billion cubic meters of gas through the Ukrainian gas transmission system capacity for five years : 65 billion cubic meters in 2020 and 40 billion cubic meters in the years 2021-2024.

If the volume of transited gas is higher, Gazprom will pay the transport through Ukraine at a higher tariff.

The Ukrainian President Volodymyr Zelensky announced that Ukraine expects to receive more than USD 7 billion from gas transit in the 2020-2025 period.

This amount roughly corresponds to the tariff level in the contracts of 2009.

The parties can extend the contract for another 10 years.

The executive director of Naftogaz, Yuriy Vitrenko, explained that the “take or pay” principle was fixed in the contracts, signed in accordance with the European regulation for gas transit. Naftogaz will be the “transit organizer”.

The contract also provides for an option of additional transit volumeswith greater booking flexibility” which will be paid at a higher tariff.

The existing contracts for the supply and transit of Russian gas through Ukraine expire on December 31, 2019.

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© Copyright 2019 – Swann Bigot, legal expert and author, founder of the platform Eurasia Business News

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