European security of supply – new contract between Russia and Ukraine on the continuation of the gas transit
Continuation of the gas transit, © picture alliance / dpa
After intensive negotiations, the Russian company Gazprom and the Ukrainian company Naftogaz concluded a new contract for gas transit through Ukraine on 31 December 2019 – one day prior to the expiry of the old agreement. The gas transit through Ukraine is thus secured for the next five years.
On 1 January 2020, the new contract between Russia and Ukraine on the continuation of the gas transit came into force, thus ensuring the uninterrupted continuation of Russian gas supplies through Ukraine to Europe. The new transit contract has a minimum duration of at least five years and provides for substantial annual minimum transit quantities. It was also possible to reach an amicable solution on mutual claims from the old contract. A fresh start free of tensions is now possible. The contract sends an important signal for safeguarding Europe’s security of gas supplies and is also a positive sign with respect to the confidence-building measures between the two countries.
Role of Germany and the EU
With the conclusion of the contract, the “trilateral talks” on the transit of Russian gas through Ukraine, which had been ongoing for one and a half years, have reached a successful conclusion. The talks were mediated by the European Commission, which was represented by Vice-President Maroš Šefčovič. The Federal Government advocated the continuation of the gas transit through Ukraine in this regard. It has actively supported the Commission through high-level meetings between the Federal Chancellor, Foreign Minister Heiko Maas and Economic Affairs Minister Peter Altmaier, as well as the respective representatives of the Ukrainian and Russian governments. Georg Graf Waldersee, who was appointed Special Representative of the Federal Government for Gas Transit through Ukraine in September 2019, has been instrumental in bringing the two sides closer together. The contracts are based on the agreement in principle reached in Berlin on 19 December 2019 and in Minsk on 20 December 2019 on gas transit from 2020.
What does the conclusion of this contract mean for Germany and Europe?
An important prerequisite for the new gas transit agreement, which is based on European law for the first time, was the concept known as “unbundling”. Unbundling refers to the obligation in the European internal market to separate gas suppliers and network operators. This creates transparency and competition in the market, which benefits consumers. Under the new Ukrainian Government headed by President Volodymyr Zelensky, Ukraine has implemented the adoption of this EU law within the space of just a few months as part of an ambitious reform process.
The continuation of the gas transit through Ukraine is a particularly clear reflection of the Federal Government’s commitment to European energy security. In particular, Germany is committed to ensuring different suppliers and supply routes as well as transparent contracts in accordance with the EU’s Third Energy Package. On the basis of market economy principles, the Federal Government therefore promotes both an alternative gas supply such as liquefied natural gas (LNG) from the US and the diversity of transport routes, which can be achieved via Nord Stream 2. In this regard, the Federal Government regrets the extraterritorial sanctions recently imposed by the US Government against this project and others, which both Germany and the EU reject as a matter of principle.