Gazprom proposes short-term gas deal with Ukraine

FILE PHOTO: The logo of Russian gas giant Gazprom is seen on a board at the St. Petersburg International Economic Forum, Russia, June 6, 2019. REUTERS/Maxim Shemetov/File Photo

MOSCOW (Reuters) - Gazprom GAZP.MM has sent a letter to Ukraine formally proposing either to extend a current deal supplying gas to the country for its own use and for transit to Europe or to sign a new one-year agreement, the Russian gas exporter said on Monday.

The current 10-year agreement between Russia and Ukraine, which have been at loggerheads since Moscow annexed Crimea in 2014, expires on Dec. 31.

Russia needs time to finish building pipelines bypassing Ukraine in order to continue exporting gas to Europe, its largest market, without supplies passing through its neighbor. Without an extension to the deal, thousands of households on the continent are at risk of gas shortages during the winter season.

Ukraine’s energy firm Naftogaz did not immediately respond to a request for comment. The country has previously said it preferred the certainty of a longer-term deal and would not agree to the short-term deal that Moscow needs.

State-controlled Gazprom also said on Monday that it had offered to drop legal claims and counter-claims by both Ukraine and Russia as a pre-condition for the deal.

Naftogaz has claimed it is owed compensation for Gazprom not pumping a certain volume of gas per year via Ukraine and paying too little for what it did send through the country’s pipelines.

Russian President Vladimir Putin has also said the arbitration claims over the deal should be dropped, calling it “nonsense”.

There have been several rounds of gas talks in Brussels, however, the meetings have so far failed to bring any tangible results.

Last year, Gazprom supplied Europe with more than 200 billion cubic meters (bcm) of gas, of which 87 bcm went through Ukraine, providing Kiev with valuable transit income.

Reporting by Vladimir Soldatkin; additional reporting by Pavel Polityuk in Kiev; editing by Jason Neely, Kirsten Donovan