Kremlin warns Naftogaz over new transit claim

There is "no chance" of Russia and Ukraine reaching a gas transit deal, after Ukraine's state-owned Naftogaz initiated a new arbitration case against Gazprom, President Vladimir Putin's spokesman, Dmitry Peskov, said on 5 November.

Naftogaz lodged a claim under Stockholm arbitration rules last week for a retrospective, upward revision of its transit tariff for Gazprom shipments through Ukraine to Europe and Turkey between 13 March 2018 and 1 January 2020 — when the companies' 10-year transit contract expires. The total sum involved could be $11.8bn, Naftogaz managing director Yuriy Vitrenko says.

This latest claim followed EU-brokered talks between Russia and Ukraine over future transit shipments, held in Brussels on 28 November.

Peskov referred to comments made by Putin last week that an amicable settlement to outstanding legal cases is needed before a new transit agreement can be reached. Gazprom has appealed against an earlier Stockholm arbitration court award of $2.56bn in Naftogaz's favour as a result of rulings in 2018 — a hearing was held earlier this month. Putin described this penalty as "nonsense".

But Gazprom could face problems meeting contractual supply commitments in Europe next year if a new deal cannot be reached. The next round of EU-brokered talks are planned for later this month, although no date has been fixed.

Russia will be reliant on transit shipments through Ukraine until its 31.5bn m³/yr Turkish Stream and 55bn m³/yr Nord Stream 2 projects are operating at capacity — both routes bypass Ukraine, which shipped 86.8bn m³ of transit gas from Russia last year. The first 15.75bn m³/yr leg of Turkish Stream should begin commercial operations at the end of this year, delivering gas for Turkey.

But the second leg, running through Bulgaria, Serbia and Hungary to Austria, will not be complete until the end of 2020, at the earliest. And the planned start-up of Nord Stream 2 at the end of 2019 has been delayed — Gazprom is yet to provide a new timeline, but exports are unlikely before second-quarter 2020.