Russia says Ukraine’s proposed gas transit tariffs are too high

Russian President Vladimir Putin attends a joint news conference with Serbian President Aleksandar Vucic (not pictured) following their talks in the Black sea resort of Sochi, Russia, 4 December 2019. [Pool/EPA/EFE]

Moscow on Wednesday (4 December) said transit tariffs proposed by Ukraine to ship Russian gas through its territory next year were unacceptable and too high, claims swiftly dismissed by Kyiv.

Ukraine is a key transit route via which Russian gas reaches Europe but a current deal between the two post-Soviet countries expires at the end of the year. Time is running out to hammer out an agreement with relations tense since Moscow annexed Crimea from Ukraine in 2014.

EU-mediated Russia-Ukraine gas talks in deadlock

Russia and Ukraine need a sense of urgency in their talks on gas transit for Europe, the European Union’s energy chief said after the latest round in Brussels on Monday (28 October) failed to yield progress.

Speaking in the Black Sea city of Sochi, Russian President Vladimir Putin said Moscow was ready to continue exporting its gas to Europe via Ukraine but that it deemed the conditions offered by Kyiv unacceptable.

His comments came after Alexei Miller, the CEO of Russian gas giant Gazprom, said the new Russian gas transit tariffs proposed by Ukraine for 2020 were too high.

“The tariffs are very, very high,” Miller said. “They are significantly higher than the current tariff at which we are now supplying gas through the territory of Ukraine.”

Yuriy Vitrenko, executive director at Ukrainian state energy firm Naftogaz, later countered Miller’s claim, saying that the tariffs Russia deemed too high had been calculated using standardised European methodology.

“The transit calculations that have been shown to Gazprom and which the Russian side is commenting on only cover the adjusted costs of Ukraine’s gas pipelines operator,” Vitrenko wrote on Facebook. “Therefore the tariff cannot be considered high.”

Naftogaz said in September that the tariff imposed on the transit of 60 billion cubic metres (bcm) of gas — a volume proposed by Ukraine and the European Union — would stand at $2.67, without value-added tax (VAT), per 1,000 cubic metres of gas transportation through 100 km of Ukrainian territory next year.

For a gas transit of 90 bcm, that figure was seen at $2.13.

It is widely expected that gas will be an issue to be discussed bilaterally between Zelenskiy and Putin in Paris on 9 December, when the ‘Normandy-type’ summit will be held.

On 25 November, Putin and Zelenskiy discussed the issue by phone.

Putin, Zelenskiy discuss natural gas in phone talk

Russian President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelenskiy have discussed natural gas supplies to Ukraine and gas transit via the country further into Europe, the Kremlin said in a statement on Monday (25 November).

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