Ukraine's Naftogaz pledges to press on with Russia gas talks

FILE PHOTO: A woman walks past the headquarters of the Ukrainian state energy company Naftogaz in central Kiev, Ukraine September 13, 2019. REUTERS/Valentyn Ogirenko/File Photo

KIEV (Reuters) - Ukrainian state energy firm Naftogaz has pledged to press on with talks on gas transit with Russian gas exporter Gazprom and the European Union, a senior Naftogaz official said on Monday.

Gazprom, which owes Ukraine around $3 billion, may repay that debt with gas supplies, Naftogaz Executive Director Yuriy Vitrenko said on Facebook.

Last week Gazprom said it had sent Ukraine a letter to formally propose extending a deal supplying gas to the country either for its own use and for transit to Europe, or the signing of a new one-year agreement.

The current deal is set to expire at the end of 2019.

“At present, we do not see any legitimate reasons for not concluding a new contract for the transit of gas through Ukraine according to European rules, and we express our willingness to work honestly on this,” Vitrenko said.

He added that Ukraine supported the idea of a new 10-year transit contract, with a guaranteed minimum yearly transit volume of 60 bcm and 30 bcm of additional flexibility.

Ukraine is one of the main routes by which Russia exports gas to Europe. Moscow’s construction of new pipelines, such as Nord Stream 2 and TurkStream, will cut Russian gas transit through Ukraine.

Last year, Kremlin-controlled Gazprom GAZP.MM supplied Europe with more than 200 billion cubic meters (bcm) of gas, of which 87 bcm went through Ukraine, providing Kiev with transit income of around $3 billion.

Relations between Kiev and Moscow have deteriorated since Russia annexed Crimea in March 2014 and pro-Kremlin separatists seized a swath of eastern Ukraine. Ukraine halted its own imports of Russian gas in November 2015 after a row with Gazprom over prices and payments.

Reporting by Pavel Polityuk; editing by Jan Harvey and Jason Neely