Gazprom offers Naftogaz conditions for new gas transit deal

Russian Gazprom (GAZP RX) has proposed new conditions
to Naftogaz (NAFTO) under which it is ready to sign a new gas transit contract
for one year, Interfax news agency reported on Nov. 18. Among the deal’s key
conditions is for the parties to waive all mutual claims in international
arbitration courts and stop all court litigations, including dropping the penalty of Ukraine’s antimonopoly committee and
Naftogaz withdrawing its claims against Gazprom to the EU Commission.

Naftogaz reported that it received Gazprom’s offer
(actively discussed by the Russian media) only on the evening of Nov. 18, and
has yet to study it. At the same time, Ukraine’s Energy Minister Oleksiy Orzhel
called the offer unacceptable, expressing his hope that the parties will return
to constructive dialogue on the issue.

Alexander Paraschiy: There is no economic sense for Naftogaz to “forgive” the USD 2.6 bln obligation of Gazprom
based on the rulings of the Stockholm Arbitration Court in 2017-2018. The signing of a contract for just one
year is not interesting for the Ukrainian side either. Therefore, the announced
terms of Gazprom’s offer indeed do not look acceptable. We expect Naftogaz will
try to agree on other terms with the mediation of the EU Commission in the
coming weeks. Also, it’s very likely that Gazprom will stop its gas transit
through Ukraine as of Jan. 1, 2020, and the parties will continue to negotiate
on new cooperation terms next year.