Russia and Ukraine agree to drop gas claims

The agreement on the waiver of mutual complaints is part of the protocol on gas cooperation that Russia and Ukraine signed on December 20. The parties' agreement, which includes the cancellation of mutual complaints, has helped to ease the gas supply bottleneck in some European countries, in the context of the current contract expiring at the end of the year and the risk of a repeat of the so-called "gas war" of 2009.

In an interview yesterday, Russian Energy Minister Alexander Novak said that the two sides had reached an agreement that from January 1 next year, the two sides would start from zero and that mutual complaints between the two sides would be nullified. Asset seizures based on court decisions would also be canceled.

According to the new agreement between Russia and Ukraine, the minimum transit volume is 65 billion cubic meters of gas in 2020 and 40 billion cubic meters of gas per year in the period from 2021 to 2024. After this period, the contract can be extended for up to 10 years.

In connection with the settlement of legal disputes, Russia's Gazprom agreed to pay Ukraine's Naftogaz $2.9 billion according to the decision made by the Stockholm arbitration court. In return, the Ukrainian government signed a settlement agreement on the removal of $7.4 million worth of antitrust claims against Gazprom. Gazprom's representative added that the payment was made on time according to the protocol of December 20. Accordingly, the third gas war was postponed, Russia and Ukraine agreed to transport gas to Europe.

"It is very important that there will be gas transit and that Ukraine will receive the amount of money decided by the Stockholm arbitration by the end of this year. This means that Ukraine and Naftogaz in particular will receive $2.9 billion in accordance with the Stockholm arbitration. In this case, the package deal will put an end to future lawsuits. This means that when Russia pays $2.9 billion, other lawsuits will be dropped," said Ukrainian Energy and Environmental Protection Minister Oleksiy Orzhel.

Meanwhile, Russian Deputy Prime Minister Dmitry Kozak said that paying the fine was a “drop in the ocean” and that compensation was beneficial and would help avoid potential risks. He said that Russia was interested in maintaining the supply route through Ukraine to the European Union even after 2024 when the agreement is due to expire.

Thus, after months of tense negotiations, Russia and Ukraine have reached an agreement to continue transporting gas from Russia to Europe through Ukrainian territory and adjust common requirements. Last year, Gazprom Group supplied Europe with about 200 billion cubic meters of gas, 40% of which passed through Ukraine, helping Ukraine earn $3 billion in transit fees each year.

However, negotiations between the two sides on a new contract have recently encountered many problems due to political tensions between Russia and Ukraine, the conflict in Eastern Ukraine and a legal dispute between Russian gas supplier Gazprom and Ukrainian energy company Naftogaz. The current contract between Russia and Ukraine will expire on December 31. The two sides reaching a new agreement on gas transportation will help avoid the risk of a repeat of the so-called "gas war" in 2009. At that time, because Russia and Ukraine could not agree on prices, gas transportation was stalled, causing many areas of Europe to have no heating gas during the cold winter./.