Ukraine, Russia sign oil transit deal for next decade


3rd December, 2019 10:13:39 printer

Ukraine, Russia sign oil transit deal for next decade

Moscow and Kiev have renewed an agreement on transit of Russian oil via Ukraine to reach Europe, interrupted this year by contamination of the pipeline, Ukraine's pipeline management company said Tuesday.

UkrTransNafta, a subsidiary of state oil company Ukrnafta, said on Facebook that it signed the agreement with Russian counterpart Transneft for 10 years from January 1 next year.

The Ukrainian company said the new contract keeps the same "basic principles of cooperation".

It said the companies also signed off on an agreement to update a number of conditions, saying this "guarantees the safe and steady functioning of Ukraine's oil transportation system for the long term.

The deal will fill Ukraine's pipeline system with "transit volumes towards Europe and provides a long-term stable source of income," it said.

Transneft confirmed the deal to AFP.

Analysts at S&P Global Platts said the amount of Russian gas transiting Ukraine to reach Europe has fallen by 4.3 percent since 2017.

Between January and September this year, the volume of oil transiting Ukraine fell 5.1 percent year-on-year, they said.

This came after an incident of serious contamination of Russia's major Druzhba, or Friendship, pipeline, which supplies several European countries.

The incident triggered a rare cutoff of transit across Europe from April 25 to May 11 and then again in May.

Russia and Ukraine's transit deal was to run out at the end of the year amid long-running acrimony between the countries.

The inauguration of comedian-turned opposition politician Volodymyr Zelensky in May has nevertheless warmed up relations.

Two major new pipelines bypassing Ukraine are due to start operating in coming months: German-Russian Nord Stream 2 and the joint Russian-Turkish project TurkStream. This will hit Kiev financially and give it less clout against Russia.