PRESS: Transit of Russian gas lossless for Ukraine from 25 bcm/yr

MOSCOW, Apr 12 (PRIME) -- Transit of Russian gas is free of loss for Ukraine if the volume tops 25 billion cubic meters annually if calculated basing on gas giant Gazprom’s transit rate via the Nord Stream gas pipeline, Kommersant business daily reported on Thursday.

Russia is ready to initiate negotiations with the E.U. on further gas transit via the territory of Ukraine after the current contract expires in 2019, the daily said.

On Tuesday, Russia’s Energy Minister Alexander Novak and European Commission Vice President for Energy Union Maros Sefcovic agreed to meet to discuss the issue without appointing a date.

On Wednesday, Ukraine’s Energy Minister Igor Nasalik said Ukraine would insist on Gazprom maintaining gas transit to the E.U. via the country at no less than 40 billion cubic meters per year after 2019.

Kommersant said that Gazprom is likely to base the price it offers on the Nord Stream pipeline rate. The current rate of transit through Ukraine is U.S. $32.2 per 1,000 cubic meters and via the Nord Stream pipeline $27.8 per 1,000 cubic meters while the ways have similar length. The real effective rate of transit through the Nord Stream for Gazprom is $22 per 1,000 cubic meters as the company gets half of the profit as the system’s shareholder.

The Nord Stream pipeline’s operating costs amount to around $7 per 1,000 cubic meters. Ukraine may try to reach the rate through upgrade despite a lower pressure in its system.

All of this means there is room for a compromise as Gazprom needs the Ukrainian gas transportation system until at least 2020–2021, Kommersant said.

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