Ukrtransnafta, Transneft plan to sign new ten-year contract in June

JSC Ukrtransnafta hopes to sign a new ten-year transit contract with PJSC Transneft in June 2019, the director general of the Ukrainian company, Mykola Havrylenko, has told Interfax-Ukraine.

We're planning to sign a new contract in June for a term of ten years. We don't see any reason it won't be concluded. Transneft has already signed contracts with MOL (Hungary) and Transpetrol (Slovakia)," Havrylenko said.

"We've eliminated the overwhelming majority of all the points of disagreement. In June, we're hoping to sign a new contract for oil transit," Igor Demin, the advisor to the president of Transneft, told Interfax.

Havrylenko said the sides have already agreed on the transit tariff, which will not change.

"The tariff isn't changing. For now, we don't see any reason to change it in either direction. If we compare it with the tariff policy in Belarus and Russia, ours is higher. The tariff policy in Europe is commensurate with ours," he said.

Discussions are still underway with regard to what law will be used in the contract, given that Ukraine insists that Russian law not be used.

"Russian [law is now used]. We're insisting on English law. Transneft doesn't want that, for obvious reasons. In any event, this won't be the Russian legal field. Most likely, some neutral zone will be chosen so that both parties are comfortable," Havrylenko said.

Transneft is the same kind of oil transportation organization as Ukrtransnafta and therefore cannot give guarantees concerning volumes to be transported through Ukraine to Europe, he said.

"As unpleasant as this may be, Transneft can't guarantee anything to us, since they're the same kind of transportation organization as we are. In this contract, we specify the possible capacities of oil pipelines to transport oil along a particular route. We absolutely readily guarantee 17 million tonnes a year, but about 15 million tonnes will probably be envisaged in the contract," Havrylenko said.

The current ten-year contract between Ukrtransnafta and Transneft was signed in November 2009.

In 2018, transit of oil through Ukraine to Europe by pipeline fell 4.3% year-on-year to 13.335 million tonnes, while oil pumped to refineries in Ukraine increased 0.2%, to 2.101 million tonnes.

Ukrtransnafta's system of main pipelines, with diameters ranging from 159 mm to 1,220 mm and a total length of 4,767 kilometers, passes through 19 Ukrainian regions. It has an entry throughput capacity of 114 million tonnes and an exit capacity of 56.3 million tonnes.