Gazprom offers Naftogaz conditions for new gas transit deal

19 November 2019

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.