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Russia, Ukraine sign gas deal as deadline looms

December 31, 2019

Ukraine's Naftogaz and Russia's Gazprom have signed a deal that will keep natural gas flowing to Western Europe. The accord builds on a number of diplomatic steps this month between Moscow and Kyiv.

Gas-compressor station in Mryn village
Image: picture alliance / dpa

Russian and Ukrainian gas companies have reached a deal to ensure the flow of Russian natural gas through Ukraine to Europe for the next five years, the two sides said Monday. 

Ukraine is set to collect more than $7 billion (€6.25 billion) in gas transit fees by 2024 under the new deal with Gazprom, Ukrainian President Volodymyr Zelenskiy said on Monday evening.

The accord means "energy security and prosperity for Ukrainians," Zelenskiy wrote on Facebook. It is also a positive signal for businesses in the European Union dependent on the reliable delivery of natural gas from Russia.

"Europe knows that we will not fail when it comes to energy security," Zelenskiy added.

Kyiv and Moscow have repeatedly clashed on gas prices and transit fees in the past, leaving consumers in Europe occasionally cut off from a key energy source.

The two sides had been pushing to reach a new accord before the previous one expires on December 31, potentially interrupting gas supplies to Europe.

Gazprom Chairman Alexey Miller said the accord would go into force on Tuesday.

"After five days of uninterrupted negotiations in Vienna, definitive decisions have been made and final deals have been reached," he said in a statement.

Earlier this month, Gazprom agreed to pay some $2.9 billion to Ukraine's Naftogaz in order to settle a long-running dispute on transit fees.

Russia, Ukraine and EU reach gas deal

Fears of Nord Stream 2

While the new deal is set to expire in 2024, there is an option to prolong it for another ten years.

Russia delivers about 40% of its gas for European markets through Ukraine. However, Kyiv fears being sidelined after the controversial Nord Stream 2 pipeline becomes operational and connects Russia directly with its top buyer, Germany.

Gazprom has already signaled it would lower the amount of gas flowing through Ukraine in 2020, reducing it from some 90 billion cubic meters to 65 billion. The cuts are set to continue in the following years, with the gas volume averaging some 40 billion cubic meters between 2021 and 2024.

The Russia-Ukraine gas agreement comes as the two countries remained locked in conflict over Russia's annexation of Crimea and Moscow's support for separatists in eastern Ukraine. It comes after Zelenskiy met with Russian President Vladimir Putin for the first time in early December alongside the leaders of Germany and France in a bid to restart stalled peace talks to end the conflict in Ukraine. The negotiations paved the way for the new gas deal and a prisoner exchange over the weekend. 

dj/cw (Interfax, dpa, Reuters, Ukrainski Novini)

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