Russia, Ukraine, EU Hold More Transit Talks

Russia, Ukraine and the EU held technical consultations in Brussels on October 21 to discuss future Russian gas transit via Ukraine, Kiev’s state gas company Naftogaz has said.

The parties talked about Ukraine’s progress in adopting EU energy legislation, including its creation of an independent transmission system operator, Naftogaz said in a statement on October 22.

Ukraine will need to complete these reforms before a new transit contract can be agreed, replacing the one expiring on January 1 2020. If it fails to achieve this in time, Moscow argues that the only option will be to extend the existing contract, preferably for a short period.

The parties also spoke about the signing of an interconnection agreement between the system operators of Ukraine and Russia implementing EU standards for gas transport, the calculation of tariffs and other issues, Naftogaz said. The next round of trilateral negotiations will take place on October 28, according to the company.

Last week, however, Gazprom's CEO Alexei Miller told Russian prime minister Dmitry Medvedev that any long-term agreement would have to follow the cancellation of the 'asymmetrical' Stockholm arbitration award against Gazprom. He also said that if Ukraine were to buy gas directly from Russia, rather than buying the same molecules at hubs and shipping it into Ukraine, the price would drop by a quarter. The interview, published on Gazprom's website, may be read here.