Naftogaz offers to make gas transit through Ukraine cheaper than Nord Stream 2

On July 13, Naftogaz Ukraine sent a proposal to the relevant national commission proposing changes to the method for calculating natural gas transit tariffs which has been in place since 2015, reported the company’s press service.

The price envisaged by the new proposal is $2.17 to transit 1000 cubic meters 100 km (with VAT and the fuel component). This is 20% less than the transit rate in the existing contract with Gazprom, and also 2.3 times smaller than the average cost of transit according to the current regulated tariffs set by the National Commission for State Regulation of Energy and Public Utilities in December 2015.

In addition, this is less than the proposed tariffs for transiting gas through Nord Stream 2.
When calculating the tariffs, Naftogaz presumed near-full utilization of the capacity of Ukraine’s gas transit system to endpoints in the EU, i.e. 141 billion cubic meters per year, which corresponds to the actual gas transit volume in 1998. This scenario would be possible if Gazprom abandoned the construction of Nord Stream 2, and if Russia unblocked the transit of gas extracted by private Russian companies and companies from Central Asia.

If Nord Stream 2 is built, the level of gas transit through Ukraine could drop to an absolute minimum. The project entails the construction and operation of two gas pipelines with a capacity of 55 billion cubic meters per year, stretching from the Russian coast, through the Baltic Sea, to Germany. Gazprom head Alexey Miller said that once Nord Stream 2 and Turkish Stream have been built, gas transit through Ukraine will be reduced to one tenth of its current volume.

  Ukraine, Naftogaz of Ukraine, Gazprom, Nord Stream - 2