Gazprom has proposed to Ukraine either to extend the current 10-year gas transit agreement expiring on 31 December 2019 or to conclude a new one-year agreement. This solution would give Gazprom more time to complete the construction of gas pipelines to Europe bypassing Ukraine (Nord Stream 2 to Germany and Turkish Stream to Turkey), and would avoid gas supply disruptions to its largest market. In 2018, over 40% of Gazprom’s supply to Europe (200 bcm) transited through Ukraine (87 bcm). However, the Russian offer is conditioned to a mutual withdrawal of all claims in international arbitration and a cessation of all proceedings, which is considered unacceptable by the Ministry of Energy and Environmental of Ukraine, which is seeking a long-term gas supply agreement.
Ukraine, Russia, and the European Union have been discussing gas transit for Europe since October 2019, with the European Commission proposing a transit contract of at least 10 years with a minimum 40-60 bcm/year ship-or-pay clause and the possibility to ship an additional 20-30 bcm/year at transit tariffs set up according to the EU's methodology. Yet, political considerations and the lengthy legal dispute between Gazprom and Ukraine's Naftogaz are blocking the discussions that remain in deadlock.