12:03 09.01.2020

Total positive effect on Ukraine's economy from gas transit during five years to be some UAH 150 bln – GTSOU head

2 min read
Total positive effect on Ukraine's economy from gas transit during five years to be some UAH 150 bln – GTSOU head

The total positive effect on Ukraine's economy from the contracts on extension of transit of natural gas signed on December 30, 2019 during five years is estimated at some UAH 150 billion, Head of Gas Transmission System Operator of Ukraine (GTSOU) LLC Serhiy Makogon has said

"We have calculated that the total positive effect on the economy during five years, apart from the revenue from transit itself, will be around UAH 150 billion," he said at a press conference at Interfax-Ukraine.

It was also said that thanks to the preservation of transit, in particular, entry tariffs for the gas transmission system (GTS) for mining companies will not be significantly increased, which in turn will lead to subsequent savings by industry and the country's population. The tariff for entering the Ukrainian GTS also affects the final cost of gas imported by the country.

"That is, mining companies will be able to invest about UAH 1 billion in their development and increase production of Ukrainian gas," Makogon said.

At the same time, the total revenue of GTSOU in five years will be about UAH 115 billion, and most of it will be from the transit component.

As reported, transit of natural gas through the GTS of Ukraine on January 1, 2020 amounted to 49.3 million cubic meters, which is 81.1% less than the average daily rate for December 2019 (261 million cubic meters), or 77.8% lower compared to December 31 (220.1 million cubic meters).

The transit contract concluded in 2009 between Naftogaz Ukrainy and NJSC Gazprom expired at 9:00 on January 1, 2020. A new agreement between Naftogaz and Gazprom on the organization of transportation, a transport agreement between Naftogaz and GTSOU, as well as an interconnection agreement between GTSOU and Gazprom were signed late on December 30, 2019, following the results of the trilateral gas negotiations between Ukraine, Russia and the European Commission.

The agreement provides for the transit of at least 65 billion cubic meters of Russian gas in 2020, which is 178 million cubic meters per day. In 2021-2024, transit will amount to 40 billion cubic meters. Payment for these volumes is guaranteed even in case of less pumping through the Ukrainian GTS.

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