Druzhba Pipeline - Parallel Disputes On Transit Fees

Parallel Disputes On Transit Fees

For the last several years, Russia and Ukraine have been tied up in transit fee disputes as the major pipelines supplying Europe with Russian oil and gas run through Ukraine. The continuous disputes were primarily based on transit of natural gas. On December 28, 2009, referring to Russia's announcement, Slovakian government said Russia issued warnings that it would stop oil supplies to Slovakia, Hungary and the Czech Republic over a transit fees dispute with Ukraine. However, the next day, Ukraine's Naftogas issued a statement confirming that Russia agreed to a 30 percent increase in the transit fees through Ukraine. The alleged rise in the tariff will be from $7.8 to $9.50 (or €6.6) per tonne of oil for transiting Ukraine in 2010 and was implemented due to the decision from the Russian side to raise prices of the energy resources. Additionally, unlike previous payments, new payments will be made in Euros as this was one of Ukraine's demands. Also Ukraine needs substantial investments to update the network on its territory as the pipeline grows old. Russia and Ukraine also agreed on the volume of oil to be transported through Ukraine. The overall amount of oil to be transported to Slovakia, Czech Republic and Hungary through Ukraine in 2010 will be 15 million tonnes - a decrease from 17.1 million tonnes in 2008.