The Russia–Ukraine gas disputes refer to a number of disputes between Ukrainian oil and gas company Naftogaz Ukrayiny and Russian gas supplier Gazprom over natural gas supplies, prices, and debts. These disputes have grown beyond simple business disputes into transnational political issues—involving political leaders from several countries—that threaten natural gas supplies in numerous European countries dependent on natural gas imports from Russian suppliers, which are transported through Ukraine. Russia provides approximately a quarter of the natural gas consumed in the European Union; approximately 80% of those exports travel through pipelines across Ukrainian soil prior to arriving in the EU.
A serious dispute began in March 2005 over the price of natural gas supplied and the cost of transit. During this conflict, Russia claimed Ukraine was not paying for gas, but diverting that which was intended to be exported to the EU from the pipelines. Ukrainian officials at first denied the accusation, but later Naftogaz admitted that because of harsh winter (lower than minus 30C) some natural gas intended for other European countries was retained and used for domestic needs. Ukraine said it will still meet its contractual transit obligations. The dispute reached a high point on 1 January 2006, when Russia cut off all gas supplies passing through Ukrainian territory. On 4 January 2006, a preliminary agreement between Russia and Ukraine was achieved, and the supply was restored. The situation calmed until October 2007 when new disputes began over Ukrainian gas debts. This led to reduction of gas supplies in March 2008. During the last months of 2008, relations once again became tense when Ukraine and Russia could not agree on the debts owed by Ukraine.
In January 2009, this disagreement resulted in supply disruptions in many European nations, with eighteen European countries reporting major drops in or complete cut-offs of their gas supplies transported through Ukraine from Russia. Gazprom accused Ukraine of taking gas intended for European customers. Naftogaz acknowledged taking gas from the transit volumes, but said it was “technical” gas needed to operate the pipeline network. In September 2009 officials from both countries stated they felt the situation was under control and that there would be no more conflicts over the topic, at least until the Ukrainian 2010 presidential elections. However, in October 2009, another disagreement arose about the amount of gas Ukraine would import from Russia in 2010. Ukraine intended to import less gas in 2010 as a result of reduced industry needs because of its economic recession; however, Gazprom insisted that Ukraine fulfill its contractual obligations and purchase the previously agreed upon quantities of gas.
On 8 June 2010, a Stockholm court of arbitration ruled Naftohaz of Ukraine must return of gas to RosUkrEnergo, a Swiss-based company in which Gazprom controls a 50% stake. Several high-ranking Ukrainian officials stated the return "would not be quick".
Russia plans to completely abandon gas supplies to Europe through Ukraine after 2018.Gas Pipelines to Europe by 2018 . Russian News Agency "TASS".Gas supplies to bypass Ukraine from 2019 — Gazprom . Russian News Agency "TASS". 2014-01-28. Gazprom has already substantially reduced the volumes of gas it transits across Ukraine, and expressed its intention of reducing the level further by means of transit diversification pipelines (Nord Stream, Turkish Stream, etc.).
In 2021 natural gas prices in the European Union have risen as high as 800% from the beginning of the year. The dispute is over the Nord Stream 2 Gas pipeline and other disputes such as Yamal-Europe pipeline that usually sends Russian gas to Western Europe was flowing in reverse.
On 1 January 2025, Ukraine terminated all Russian gas transit through its territory, after the contract between Gazprom and Naftohaz signed in 2019 expired.
Historical background After the dissolution of the Soviet Union, oil import prices to Ukraine reached world market levels in 1993. However, gas import prices and transit fees remained below European levels for Russian exports to Europe through pipelines in Ukraine; these were set in bilateral negotiations. At the same time Ukraine remained the main transit corridor for Russia's gas export. In 2004–2005, 80% of Russian gas exports to the European Union were made through Ukrainian territory. Two-thirds of Gazprom's revenue comes from the sale of gas that crosses Ukraine.
Ukraine's annual gas consumption in 2004–2005 was around . Around were produced domestically, were bought from Turkmenistan, and were received from Russia in exchange for transport of Russian natural gas. The remaining were purchased from Russia.
The gas trading system differed substantially from the gas sale to the European Union. It caused problems in the form of large-scale deliveries of relatively cheap Russian gas causing an increase of energy-intensive industries. This supported Ukraine's status as one of the world's least energy-efficient countries and largest gas importers. There was an accumulation of Ukrainian debts and non-payment of the debts, unsanctioned diversion of gas and alleged theft from the transit system, and Russian pressure on Ukraine to hand over infrastructure in return for relief of debts accumulated over natural gas transactions.
Gas trading was conducted under a framework of bilateral intergovernmental agreements which provided for sales, transit volumes, gas prices, gas storage, and other issues such as the establishment of production joint ventures. Commercial agreements were negotiated between the relevant companies within the guidelines and dictates of that framework and supplemented by annual agreements specifying exact prices and volumes for the following year. Gas sales prices and transit tariffs were determined in relationship to each other.
Commercial agreements and trade relations have been non-transparent. Trade has been conducted via intermediaries such as Itera, EuralTransGaz, and RosUkrEnergo. RosUkrEnergo's involvement in the Russian-Ukrainian gas trade has been controversial. There are allegations that the company is controlled by Semion Mogilevich and its beneficiaries include strategically placed officials in the Russian and Ukrainian gas industries and governmental structures related to the energy sector.According to former Ukrainian prime minister Yulia Timochenko, RosUkrEnergo is controlled by Semion Mogilevich.
Russian prime minister Vladimir Putin has made accusations that RosUkrEnergo is owned by a business ally of Ukraine's ex-president, Viktor Yushchenko. The Ukrainian investigation into RosUkrEnergo, during Yulia Tymoshenko's first term as prime minister, was closed after she was fired by Yushchenko in September 2005.
According to a contract between Gazprom and Naftogaz signed on 21 June 2002, payment for the transfer of Russian natural gas through the Ukrainian pipeline system had been made in exchange for no more than 15% of the gas pumped through Ukrainian territory to be taken in lieu of cash. This contract was supposed to be valid until the end of 2013. On 9 August 2004, the two companies signed an addendum to the contract, according to which the amount of gas given as a payment was calculated based on a tariff of US$1.09 for the transportation of 1,000 cubic meters of natural gas over a distance of ; the addendum further stated the price of the natural gas supplied to Ukraine was to be $50 per 1,000 cubic meters (approximately $1.40 per million Btu).
This price was constant notwithstanding the gas prices in the European markets. According to the addendum the price was not subject to change until the end of 2009. Gazprom argued that this addendum was only applicable provided that the two countries sign an annual intergovernmental protocol that has higher legal status for specifying the terms of gas transit. According to Gazprom, the addendum becomes void as the annual protocol had not been signed for 2006 under the required terms. Russia claimed that Gazprom's subsidies to the Ukrainian economy amounted to billions of dollars.
According to the agreement of 2006, RosUkrEnergo was to receive no more than 20 percent of the total delivered gas, which in 2007 was of .
Disputes of the 1990s Initial disputes concerning gas debts and non-payment appeared immediately after the collapse of the Soviet Union. As a result of disputes over non-payments by Ukraine, Russia suspended natural gas exports several times between 1992 and 1994. This led to the illicit diversion of Russian natural gas exports from transit pipelines by Ukrainian companies and institutions in September 1993 and November 1994. The diversion of gas was acknowledged by Ukraine, while accusations of other diversions were disputed.
In September 1993, at a summit conference in Massandra, Crimea, Russian president Boris Yeltsin offered to Ukrainian president Leonid Kravchuk to forgive Ukrainian debts in return for control of the Black Sea Fleet and Ukraine's nuclear arsenal. After a strong negative reaction from politicians in Kyiv, the idea was abandoned. An intergovernmental agreement was drafted on gas issues, including a clause stating Ukraine would permit Gazprom to participate in the privatization of Ukrainian enterprises in gas and other sectors.
In March 1994, a Ukrainian deputy prime minister agreed with Russia that Gazprom could acquire a 51% stake in the pipeline system. In early 1995, Russia and Ukraine agreed to create a joint company, Gaztransit, to operate Ukraine's natural gas transit infrastructure in exchange for the cancellation of a substantial portion of Ukraine's debts to Russia. These agreements were never implemented, and in November 1995, the Verkhovna Rada, Ukraine's parliament, adopted a law prohibiting the privatization of oil and gas assets.
In 1998, Gazprom and Naftohaz made a contract under which Gazprom would pay for the transit of volumes of gas, which established a link between gas prices and transit tariffs, but this contract did not resolve the problem of already incurred gas debts. In 1998, Gazprom alleged that Ukraine had illegally diverted gas meant for export to other European countries and suspended exports of oil and electricity to Ukraine in 1999. Gazprom also claimed that Ukraine's gas debt had reached $2.8 billion.
In 2001, Deputy Prime Minister Oleh Dubyna acknowledged that in 2000 alone of Russian natural gas had been diverted from export pipelines. The debt issue was settled on 4 October 2001, by the signing of an intergovernmental agreement on Additional Measures Regarding the Provision of Transit of Russian Natural Gas on the Territory of Ukraine (the 2001 Transit Agreement).
Dispute of 2005–2006
Beginning in 2004, amidst rising international gas prices, Gazprom insisted on gradually adapting gas prices charged. Until 2005 Ukraine was charged $50 per 1,000 c. New CEO of Naftohaz Oleksiy Ivchenko at March 2005 proposed transit price rise to $1.75—2 per 1000 cubic meters. In negotiations over gas prices for 2006 Gazprom insisted on a new price of $160 per 1,000 cubic meters. The Government of Ukraine agreed, with the stipulation that price increases were to be gradual, in return for increased gas transit fees and changing the method of payment for transit from payment in kind to cash.Russian newspaper Kommersant daily, Tuesday, 29 March 2005
In May 2005, it was revealed that of gas which Gazprom had deposited in Ukrainian storage reservoirs during the previous winter had not been made available to the company. It remained unclear if the gas was missing, had disappeared due to technical problems, or had been stolen.