Russia EU Ukraine gas talks slowing

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2724
Russia EU Ukraine gas
Image source: hydrocarbons-technology.com

Russia, EU and Ukraine are taking a break in talks over renewing their 10-year-old gas transit contract which expires Jan. 1, 2020.

Noting that “time is flying,” European Commission vice president Maroš Šefčovič, says he was “disappointed” by Monday’s Russia-EU-Ukraine talks on renewing the 10-year-old gas transit contract that expires on New Year. “Given the date, there is and there must be a clear sense of urgency,” he said. Russia’s negotiator, Energy Minister Alexander Novak, told Rossiya-24 TV that gas talks will resume at the end of November.

An agreement could be signed after Dec. 17, the date when Ukraine’s new EU-standard laws will come into effect and the separation of Ukraine’s pipeline system from Naftogaz will be completed, Oleksiy Orzhel, Ukraine’s Minister of Energy and Environment Protection, told reporters in Brussels. “We fully support the position of our European partners,” he said, saying that Šefčovič proposes a 10-year contract based on an average of 60 billion cubic meters of year, with the possibility of hitting 90 bcm. Last year, Ukraine shipped 87 bcm of Russian gas. Naftogaz CEO Andriy Kobolyev said of the EU position: “We had pretty much the same view.”

Russia argues for a “package” approach that would include resolution of its $3 billion debt to Naftogaz, stemming from a Stockholm arbitration court ruling last year. Raising the possibility of high-level talks. Russian President Vladimir Putin spoke by telephone Monday with German Chancellor Angela Merkel about the transit of Russian gas through Ukraine.

Naftogaz plans to place Eurobonds for $500 million with maturities of five to seven years, Interfax reports. A roadshow organized by Citibank starts tomorrow with investor meetings in London, New York, and Boston. In July, the state energy company placed three-year Eurobonds for $335 million and five-year Eurobonds for €600 million. The yield on the dollar issue was 7.375%. The yield on the euro issue was 7.125%.

Meanwhile, Interpipe, the international vertically integrated pipe and wheel company, has completed a restructuring with partial cancellation of its debt, including $200 million Eurobonds with a 10.25% coupon. The debt was partially reduced by a new issue of five year Eurobonds of $309 million at 10.25%. Interpipe is one of the world’s 10 largest manufacturers of seamless pipes and is the world’s third-largest producer of seamless-rolled railway wheels.

Source: Ukraine Business News newsletter

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