Moscow and Kiev signed a five-year agreement on Monday on December 30 on the transit of Russian gas to Europe via Ukraine, after months of difficult talks but just before the scheduled deadline for the year us.
The current gas transit agreement between the two ex-Soviet countries expires on Tuesday and ties between them have been broken since Moscow annexed Crimea in 2014 and supported the separatist insurgency in eastern Ukraine.
About 18% of the European Union’s annual natural gas consumption comes from Russia via Ukraine, putting additional pressure on EU officials who helped negotiate the deal.
“Ukraine has signed a five-year transit contract,” Ukrainian President Volodymyr Zelensky announced on his Facebook page, almost two weeks after reaching an interim agreement.
“A whole complex of documents has been signed,” which allows “gas transit after December 31,” Alexei Miller, the head of Russian gas giant Gazprom, told Russian media.
Gazprom is expected to transit at least 65 billion cubic meters of natural gas through Ukraine next year, and at least 40 billion annually between 2021 and 2024, Zelensky said, earning Kiev “more than seven billion dollars “.
Other details revealed by Naftogaz Ukraine include the $ 2.918 billion compensation paid by Gazprom under the Stockholm Arbitration Awards of December 2017 and February 2018, which Naftogaz received on December 27, 2020 , as well as the withdrawal of all arbitration proceedings in which the final decisions have not yet been rendered.
The EU has mediated in the difficult Ukraine-Russia talks.
“We have demonstrated the reliability of Ukraine as an EU transit partner. Our team thanks the European Commission for its consistent position and has certified that the Ukrainian GTS is reliable and efficiently managed. We also thank the United States for its strong support for energy security in Europe, “said Andriy Kobolyev, CEO of Naftogaz.
Last year, the Russian gas giant Gazprom supplied Europe with 200.8 billion cubic meters of natural gas, with about 40% in Ukraine, which earned the country about $ 3 billion a year in transit rates.
Russian President Vladimir Putin said earlier this month that Moscow wanted to keep some gas circulating in Ukraine, despite having built several pipelines in Europe since the current deal was agreed a decade ago.
It comes days after Russian energy giant Gazprom paid $ 2.9 billion to Ukraine’s Naftogaz to resolve a lengthy dispute over traffic rates, in what had been a major obstacle to the deal.
Russia’s pipelines include the Nord Stream 2 project, which will be completed by the end of next year, which aims to double gas volumes to Germany.
The United States has long opposed the $ 9.5 billion project, and the U.S. Senate voted last week to impose sanctions on companies working on it.
Washington insists the pipeline would give Russia too much influence over economic and security issues in Western Europe.
As EURACTIV revealed, the United States is also willing to impose sanctions on any additional line to the Turkish Stream pipeline.
Russian gas transit problems began after the fall of the Soviet Union, when an independent Ukraine gained control of the pipeline infrastructure.
After several supply crises, Russia used gas as a weapon against Ukraine and cut off supplies repeatedly in 1992, 1993 and 1994.
The current contract between Russia and Ukraine was signed after the last gas crisis that ended up disrupting European supplies in the winter of 2008-2009.