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    Russia, Germany Discuss Ukrainian Gas Transit


The present contract expires at midnight on December 31 and the operator of Nord Stream 2 is still waiting for a decision on where the line can cross Danish waters.

by: Joseph Murphy

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Natural Gas & LNG News, Europe, Corporate, Import/Export, Political, Supply/Demand, News By Country, Germany, Russia, Ukraine

Russia, Germany Discuss Ukrainian Gas Transit

Gazprom head Alexei Miller held a meeting in Moscow on October 9 with German government commissioner Georg Graf Waldersee to discuss Russian gas transit through Ukraine, Gazprom said in a statement.

The gas supplier’s 10-year transit contract with Ukraine’s Naftogaz is due to expire at the end of this year, and the two sides are yet to make progress agreeing a replacement deal. Ukraine is by far the biggest transit route for Russian gas supplies heading to Europe, with volumes totalling 87bn m3 in 2018.

Nord Stream 2 will be able to divert 55bn m³/yr from Ukraine, but its start date remains uncertain. It is about four-fifths built but Denmark has yet to decide which of the two proposed routes through its exclusive economic zone to approve.

Uncertainty about supplies next year helps explain the decision of companies and governments across Europe to store record levels of gas to safeguard against disruptions. Germany is the biggest buyer of Russian gas in Europe, taking 58.5bn m3 last year, which, at 61%, is a sizeable majority of its total gas demand.

Miller and Waldersee discussed how Russian gas supplies to Europe would be organised next year. Gazprom reiterated its position that if Ukraine fails to unbundle its gas transmission system and implement other EU energy reforms on time, the only option will be to extend the existing contract.

Kiev, however, wants to arrange a new contract that complies with European network codes, and Naftogaz believes unbundling of its transport business as an independent system operator, and appropriate certification, is achievable this year.

According to Gazprom, Miller also said Ukraine needed to decide how much Russian gas it would purchase, so that Russia can determine how much of its transmission system capacity will be needed to provide for these supplies. For the past four or so years, Ukraine has bought no Russian gas directly from Gazprom, although nearly all its imports originate from Russia. Gas importers in Europe have been selling surplus gas at hubs, where prices have been very low this year.