Wednesday, Aug 4, 2021
International Finance
Oil & Gas

Disputes settled, Gazprom extends gas deal with Ukraine

Gazprom Ukraine
Gazprom and Ukraine have agreed not to start any new gas lawsuits against each other

Russia-based state-owned oil company Gazprom has signed a new five-year deal with Ukraine to continue sending gas through Ukraine to European markets.

Russia sends around 40 percent of its gas deliveries to Europe through Ukraine.

According to the deal, both Gazprom and Ukraine have agreed not to start any new gas lawsuits against each other and to bury all their pending legal cases.

Gazprom chief executive Alexey Miller said that Ukraine-based gas company Naftogaz will organise the transit of Russian gas through the country, with a booked pipeline capacity of 65 billion cubic meteres for 2020 shipments. He also revealed that between 2021 and 2024, the booked capacities will reach 40 billion cubic meteres a year.

The two companies also considered the possibility of extending the deal until 2034. The extension will be under the same term as the five-year deal, according to Ukraine’s Energy Ministry.

With regard to the deal, EU Commission Vice-President Maros Sefcovic told the media, “The transit through Ukraine will continue and the strategic nature of the transit was understood by everyone and I believe it would help us open a new chapter in this relationship.”

He added, “There are very precise deadlines until when everything should happen. I have no doubt that everything will go smoothly as of January 1 because there was a full understanding of what needs to be done.”

According to media reports, Gazprom will also pay to Naftogaz $2.9 billion awarded by the Stockholm arbitration in 2018. The sum includes a $2.6 billion debt and fines accumulated thereafter.

According to media reports, Gazprom is planning to construct a giant petrochemical plant in Bovanenkovo, which will produce about 3 million tonnes of plastics products such as polyethylene and polypropylene per year.

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