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Ukraine loses $3 billion per year if Russian gas transit ceased, - Naftogaz CEO

Yuriy Vitrenko, Naftogaz Ukraine CEO, believes that if Russian gas transit is ceased, Ukraine will have great chances to win another arbitration claim with Gazprom for $12 billion as compensation for accelerated depreciation.
18:57, 21 January 2019

112 Agency

If Ukraine does not sign a contract on Russian gas transit till 2020, it will lose around $3 million per year, as Yuriy Vitrenko, Naftogaz Ukraine CEO, said ahead of trilateral gas talks of Ukraine, Russia and the European Commission on a political level concerning Russian gas transit after 2019, as Interfax reported.

“If the contract is not signed, gas will not be transmitted through Ukraine. Primarily, it’s an economic problem. There will be no income from the transit, which is around $3 million in a year,” Vitrenko said.

Related: Ukraine waiting for Gazprom property and transfer of money to Naftogaz

He believes that if Russian gas transit is ceased, Ukraine will have great chances to win another arbitration claim with Gazprom for $12 billion as compensation for accelerated depreciation.

“It is about claims which we will make within the next arbitration, which we have already started. Indeed, the sum of the suits makes around $12 billion. A part of these suits is a consequence of the fact that we do not expect gas transit through Ukraine after 2019… Chances for victory are rather high,” Naftogaz CEO said.

Related: “Gazprom” can stop gas transit through Ukraine in 2020, - Naftogaz Head

According to him, the European rules provide a principle of full compensation of the operator’s expenses. In particular, when Naftogaz counts expenses for transit for 2018-2019, it should take into account expenses for transit in 2018-2019, it has to consider amortization of the Ukrainian natural gas transmission system, which loses its value with time.

“If transit continues after 2019 we calculated the so-called normal amortization taking into account that Ukraine’s natural gas transmission system can be used for another 15 years. However, due to Russia’s activities we cannot expect transit after 2019 at the level which would make us sure that the Ukrainian natural gas transmission system will be used for transit, we have to assess the so-called accelerated amortization,” he said.

Related: Stockholm Arbitration unites Gazprom, Naftogaz lawsuits

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