Reduced Transit Volumes and Less Money - but the Deal is Saved.

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Reduced Transit Volumes and Less Money - but the Deal is Saved.

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Russia and Ukraine agree to a new gas deal (peteri / Adobe Stock)
Russia and Ukraine agree to a new gas deal (peteri / Adobe Stock)

Russia and Ukraine have agreed on a gas transit contract. A basic regulation for the transit of Russian gas through Ukraine to Europe have been clarified in a last minute effort.

As the Russian news agency Interfax reported with reference to the supplier Gazprom, the negotiated contract is valid for the next five years. The current agreement expires after ten years at the end of 2019, so time was a pressing factor in the negotiations alongside the political tensions between Russia and Ukraine who are simultaneously in a state of silent war with one another. 

However, the transit volumes are significantly lower than before. Instead of the approximately 90 billion cubic metres a year so far, only 65 billion cubic metres of gas are to be pumped through Ukraine to Europe in 2020. From 2021 to 2024, 40 billion cubic metres of gas per year are planned for transit. This is due to the Nord Stream 2 pipeline, which is expected to deliver the bulk of the gas to Europe. 

For Ukraine, the new contract means considerable financial losses as it charges transit fees based on quantity. In addition, the country had hoped for a ten-year contract again but now was forced to agree to a short-term contract of 5 years. 

At present, Russia cannot completely dispense with gas transfer through Ukraine because the capacity of Nord Stream 1 is insufficient and because Nord Stream 2 is still under construction and will be delayed due to American sanctions. 

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