Ukraine Trebles Price for Transiting Russian Gas to Europe

Ukraine has more than trebled the price of transiting Russian natural gas to Europe via its territory since the start of 2016, according to Ukrainian media outlet energy.apostrophe.com.ua.

The change means that Russia's Gazprom now must pay Ukraine USD 7.9 to carry 1,000 cubic meters of gas along a distance of 100 km of Ukrainian pipelines. The price was USD 2.5 until the end of last year.  

Ukraine's energy regulator decided in December to increase the price of gas transit to Europe and change the formula for its setting. Until the end of 2015 the price of transit was pegged to the price of Russian gas according to an agreement between Ukraine's Naftogaz and Russia's Gazprom signed in 2009. Since the start of 2016 the price of transit is being set by Ukraine's state -run energy regulator on the basis of expenditures incurred by Ukrainian gas transmission company Ukrtransgaz, with the impact of gas price on the price of transit being considerably reduced.

Ukraine is expected to send to Gazprom the first invoice calculated under the new rules next month - for the transit volumes shipped across the country's territory in January, the Ukrainian media outlet said citing government sources.

Gazprom is expected to dismiss the new methodology applied by Ukraine and pay just a portion of the increased price, according to the article. Ukraine will then seek arbitration to get reimbursed for the remaining portion of the price by Gazprom.

Naftogaz CEO Andriy Kobolev has said that the new system of pricing in gas transportation introduced by Ukraine is in line with the rules of the European Union.

"Ukraine has introduced a new system of gas transportation relations. It applies not only to Gazprom but any company that wants to transport gas...