European Commission proposes Ukraine sign ten-year gas transit contract with Russia

"The [European] Commission prepared and tabled its proposal regarding the framework for Russian gas transit through Ukraine after 2019. According to the proposal, the new gas transit contract should be long-term, i.e. 10 or more years, and provide for transit volumes that would be economically viable for a high-profile European investor. In his comments to media, [European Commission Vice-President for the Energy Union] Maros Sefcovic explained that the contract should include transit volumes 'usually delivered through Ukraine's GTS'," the report says.

The European side also emphasized that the contract should be concluded according to European legislation implemented in Ukraine, which includes standard interconnection agreements between the Ukrainian transmission system operators and those of all neighboring countries.

European Commission representatives acclaimed Ukraine's material progress in the implementation of European legislation in its domestic gas market and noted the validity of the previous arbitration rulings as well as Naftogaz's right to initiate further claims.

"We would like to thank the Commission and Mr Sefcovic personally for their comprehensive proposal. I'm pleased that we share the vision of how European rules and procedures should be applied to the new contract. The Commission's proposal will be a starting point for further negotiations on the transit contract. We are going to study it closely and discuss with our shareholder. Considering the context and our previous experience with Gazprom, we see significant risks to those negotiations. Nevertheless, we hope that active mediation by the Commission will help us design a contract based on transparent European rules," Naftogaz CEO Andriy Kobolyev said.

On January 21, Brussels hosted trilateral talks between Ukraine, the European Commission and Russia on the future of gas transit through Ukraine after the current contract between Ukraine's Naftogaz and Russia's Gazprom expires at the end of 2019.