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You're reading: Ukraine to start talks on Russia lifting export duties, restrictions on gas transit

Ukraine plans to immediately make use of provisions in the agreement on a free trade zone between CIS countries to initiate talks about lifting trade restrictions and export duties, starting with Russia, said Valeriy Muntiyan, the government envoy for cooperation with Russia, the CIS, EurAsEC and other regional associations. 

“We plan to start talks with Russia about lifting transit restrictions so that we can have access to Central Asian gas as to the alternative. The second matter is the lifting of export duties, especially those set by Russia on oil,” he said at a press conference in Kyiv on Monday.

Lifting export duties would enable Ukraine to re-open the refineries that are currently idle, he said.

The agreement on free trade allows for such talks to start six months after it comes into force. The agreement enters into force 30 days after the depository receives a third notification of ratification. On July 30, Ukraine was the third country to ratify the document, after Belarus and Russia.

The government envoy said there is a risk that such talks will not be fruitful.

The next stage after an agreement on free trade of goods is the establishment of a free trade zone for services. This will also be very beneficial to Ukraine, as its services trade turnover with CIS countries amounts to $9 billion, he added.

Ukraine acquired over 30 billion cubic meters of gas per year from Turkmenistan until 2006. After that, all Central Asian natural gas was supplied by Gazprom through its affiliated company RosUkrEnergo AG (Switzerland). Ukraine completely switched to Russian gas in 2009, the price for which considerably grew.

All attempts by Kyiv to return to alternative gas supplies from Central Asia (Turkmenistan, Uzbekistan, Kazakhstan) were blocked, as Russia’s Gazprom did not want to transport it to Ukraine. In addition, the 2009 gas agreement with Russia obliges Kyiv to buy a surplus amount of gas but prohibits its export.

Only in April 2011 did Dmytro Firtash’s OstChem Holding, Gazprom’s partner in RosUkrEnergo, obtain access to Central Asian natural gas. The terms under which the private company agreed such supplies with the Russian gas monopoly have not yet been revealed.

The oil export duty in Russia is $336.6 per tonne from August 1.

Independent Ukrainian experts do not think Kyiv has much chance of getting Moscow to lift transit restrictions and export duties. They think Russia will propose resolving this issue by Ukraine joining the Customs Union, created with Belarus and Kazakhstan, and closing the route for Ukraine to establish a free trade zone with the EU.

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