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Ukraine is ready to extend Russian gas transit for 15 years with reduced tariff—Shmyhal

Ukraine expects to extend the contract for the transit of natural gas for 15 years after 2024 and confirms its readiness to pump volumes in excess of 40 billion cubic meters at reduced tariffs of 50%.

This was announced by the Prime Minister of Ukraine Denys Shmyhal in an interview with Radio Liberty.

"An extension of 15 years is ideal for us. A corresponding proposal was made by Ukraine: we are ready to increase transit by another 55 billion cubic meters and we are ready to transit this volume at a half of the price indicated in the existing contract," he said.

According to him, in order to implement this proposal, Ukraine needs to obtain the consent of the EU, given that this transit will be the cheapest offer of all.

Gas transit options through Ukraine

In October, the Ukrainian side offered the European leadership to carry out additional gas supplies in excess of the existing contractual 40 billion cubic meters under the "special conditions".

The special conditions include additional transit capacity of up to 55 billion cubic meters with a discount of up to 50% of the existing tariff in the contract between Naftogaz and Gazprom.

Current conditions for gas transit from Russian Federation to EU

Recall that the current contract for the natural gas transit from the Russian Federation to the EU through the territory of Ukraine is valid for 40 billion cubic meters per year for the period 2021—2024 The contract was signed on December 30, 2019 following the results of the trilateral gas negotiations Ukraine—Russia—the European Commission.

The contract defined the volume of transit in 2020 as at least 65 billion cubic meters of gas, which in daily terms is 178 million cubic meters. In 2021—2024, the transit will be 40 billion cubic meters annually. The payment for the above volumes is guaranteed even in the case of less pumping through the GTS of Ukraine.

According to the agreement between the companies, unofficially published on the web, the cost of the service is calculated at a rate of $2.66 per 1,000 cubic meters per 100 km.

If Gazprom needs to transport more than the guaranteed daily volumes stipulated in the contract, it issues a corresponding request to Naftogaz. The purchase of additional capacities is carried out with increasing coefficients that are approved by the Ukrainian regulator NEURC.

The inflow throughput capacity of the Ukrainian GTS is 281 billion cubic meters, at the outflow one—146 billion cubic meters.

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