After several years of arguing in courts and disputing the decisions afterwards, Russia’s Gazprom and Ukraine’s Naftogaz have finally signed a new long-term contract on gas transits via Ukrainian territory, which will come into effect on 1 January 2020.
The gas dispute between Russia and Ukraine essentially started over violations of a contract signed back in 2009. It posited that Ukraine would buy a certain amount of Russian gas annually, while Gazprom would transit a certain minimum volume of gas every year through the Ukrainian pipeline. However, at some point after the Ukrainian government was overthrown in the 2014 coup, Kiev stopped buying gas, thereby initiating a gas dispute between countries.
Here is how it erupted and developed over the years, with mutual demands, lawsuits, and attempts to reconcile.
Signing of New Contract
While Ukraine was satisfied with the court’s decision, Gazprom appealed the ruling, refusing to pay the consequent $2.56 billion fine. The fine also served as a stumbling block in the negotiations between Gazprom and Naftogaz on a new contract to replace the one signed in 2009 – the Russian company demanded that the two parties mutually nullify their demands in order to sign an agreement. Kiev refused to do so, even though the contract would guarantee gas transits through Ukraine despite the upcoming launch of two new pipelines to Europe from Russia.
In the end, Russia acceded to Ukraine’s demands and signed the new contract on 31 December 2019 while agreeing to pay $2.56 billion, with Russian Prime Minister Dmitry Medvedev calling it a “necessary compromise”. At the same time, the new deal ensures that the two sides will never file any new suits on old contracts in the future and will recall all pending cases from the courts against each other.
Gazprom will transit at least 65 billion cubic metres (over two trillion cubic feet) in 2020 and 40 billion cubic metres (1.5 trillion cubic feet) per year thereafter for four more years through Ukraine under the new contract. Ukrainian President Volodymyr Zelensky stated that Kiev expects to receive at least $7 billion in revenue during the five-year period that the contract covers.
Sourse: sputniknews.com
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