EU. Russia. Ukraine to Discuss Next Gas Transit Plan in September

The EU and Russia plan to meet again with Ukraine to discuss post-2019 gas transit terms in the second half of September. Russian energy minister Alexander Novak said late Thursday in Moscow.

That gives Russia and Ukraine just over three months to agree new terms before the current transit contract expires at the end of this year. creating uncertainty about how much Russian gas will transit Ukraine from 2020.

European customers will receive their gas in line with their contractual terms in 2020. Novak told reporters after meeting European Commission vice-president for energy union Maros Sefcovic in Moscow Thursday.

He declined to say what Russia would do if there is no deal with Ukraine before then.

Russia is building two alternative routes to Europe. the 55 Bcm year Nord Stream 2 link to Germany and the 31.5 Bcm year TurkStream link to Turkey.

TurkStream`s first string will be ready to flow gas by the end of the year. but Nord Stream 2 could be delayed until mid-2020 by permitting issues for the Danish section.

A delay to both Nord Stream 2 and a new transit deal with Ukraine could see European customers restricted to their minimum contracted volumes in early 2020.

That could spike European gas prices if customers are forced to buy more expensive alternatives. like storage and LNG imports. to cover any extra gas they need.

TIME RUNNING OUT

Sefcovic had been pushing for the next trilateral talks to be before the summer. but Novak said the delay was to give Ukraine time to elect its new parliament.

Ukrainian gas company Naftogaz`s executive director Yuriy Vitrenko slammed the delay. however. saying Friday that Russia had also used Ukraine`s presidential elections earlier this year as a reason to delay talks.

Ukraine wants new transit terms in line with EU rules for after 2019. while Russia has suggested extending the current disputed contract. which is mired in a long-standing arbitration dispute that will not be resolved before 2020.

Russia sent 87 Bcm through Ukraine to Europe in 2018. but this could drop to less than 20 Bcm year once Nord Stream 2 and TurkStream start up.

Sefcovic. a fluent Russian speaker from Slovakia. has been pushing the trilateral talks but may not see them through to their conclusion. as his mandate as an EU commissioner ends on October 31.

A new set of EU commissioners is due to start their five-year mandate on November 1.

 

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