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International Monetary Fund estimates Ukraine's losses from Nord Stream 2 launch at $ 1.2 bln per year until 2024

Kiev has openly expressed fears that Russia could cut off its access to transit fees once it begins delivering gas supplies to Western Europe through the recently built Nord Stream 2 underwater pipeline.

According to the International Monetary Fund (IMF) research, the launch of the Nord Stream 2 gas pipeline is expected to reduce Ukraine's gas transit revenues by about $ 1.2 billion a year until 2024, as long as the current transit contract with Gazprom is in force, Interfax-Ukraine reported.

The IMF analysis says:

  • The projected activation of the Nord Stream 2 pipeline will reduce Ukraine's gas transit revenues
  • Over the last 5 years, Ukraine received an average of just over $2.5 billion per year in return for making its gas pipelines available to Gazprom
  • In 2021, transits fees are expected to be around 40% less than recent years
  • Once Nord Stream 2 is operational, the volume of gas passing through Ukraine could decrease further, with Ukraine's transit revenues forecasted at around $1.2 billion per year
  • The current contract between Gazprom and Naftogaz will expire in 2024

As reported, the agreement between Naftogaz and Gazprom for the organization of transportation, a transport agreement between Naftogaz and the new operator GTSOU, as well as an inter-operator agreement between GTSOU and Gazprom were signed on December 30, 2019 following the results of the trilateral gas negotiations Ukraine-Russia-European Commission.

The contract provides for transit in 2020 of at least 65 billion m3 of Russian gas, which in daily terms is 178 million m3.

In 2021-2024, transit will amount to 40 billion m3.

Payment for the above volumes is guaranteed even in the case of less pumping through the Ukrainian GTS.