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Russia continues Ukrainian gas transit despite dispute

05 Mar 2018 13:41 GMT
Russia continues Ukrainian gas transit despite dispute

London, 5 March (Argus) — Russia plans to continue Ukrainian transit until state-controlled Gazprom is able to terminate the contract with Ukraine state-controlled Naftogaz.

Russian deliveries to Europe through Ukraine are "not under threat until the transit contract between Gazprom and Naftogaz is terminated", energy minister Alexander Novak said on 3 March.

Novak was speaking to European Commission vice-president Maros Sefcovic, who also talked to Ukrainian prime minister Volodymyr Groisman and Naftogaz chief executive Andriy Kobolev.

Novak "gave reassurances that the transit of gas to EU member states is not endangered and remains reliable," the commission said.

And the commission said it is willing to help negotiations.

"The European Commission stands ready to engage and mediate in a trilateral process, which in the past proved to be effective in bridging differences between the parties," Sefcovic said.

Russia is ready to resume trilateral talks on resuming supply to Ukraine, Novak said on 3 March.

Gazprom refused to restart deliveries to Naftogaz on 1 March and returned the Ukrainian firm's prepayment.

Gazprom and Novak say that flows will not resume until an additional agreement is signed following the court's decision.

But there are "no grounds" for these talks, Novak said today.

Gazprom plans to start the procedure for terminating its supply and transit contracts with Naftogaz, which run until the end of 2019.

Gazprom formally informed Naftogaz of beginning the process of terminating the deals because of the "commercial imbalance" between the two contracts, Gazprom chief executive Alexei Miller said today.

But this may "take some time and will not have immediate consequences on the gas flows", the commission said.

The ruling may not even take place before the contracts' expiry. Gazprom is appealing to the Stockholm arbitration court, which also ruled on the contracts and awarded a net $2.56bn.

Those proceedings lasted almost four years after being launched in mid-2014 followed by decisions in December 2017 and last month.