Ukraine thinks to stop Russian gas transit after 2024

Extending the transit of Russian gas to the European Union through Ukrainian territory after the expiration of the current five-year agreements in 2024 is unlikely, Kyiv is “preparing systems to reduce supplies.” This was stated by Minister of Energy of Ukraine German Galushchenko.

“I really can’t imagine how it can be on a bilateral basis [в условиях идущей российской военной спецоперации на Украине]”, – said Galushchenko. He believes that Europe is likely to be relatively prepared for a further slowdown in supplies, as it has already had to adjust to similar cuts in the past by lowering demand and finding alternative sources of imports, as well as by replacing pipeline gas with marine supplies of liquefied natural gas (LNG).

At the same time, Galushchenko conceded that European politicians might still want to renegotiate the treaty, as happened in 2019 when an EU delegation brokered tripartite talks with Russia and Ukraine.

On June 2, Russian Deputy Foreign Minister Mikhail Galuzin said that Kiev’s possible decision not to renew the gas transit agreement would “strike” the EU, and Ukraine would “shoot itself in the foot by losing transit dividends.” This is how the Russian diplomat commented on the assumption of the ex-general director of the Austrian oil and gas company OMV, Gerhard Reuss, that Ukraine most likely does not intend to renew the gas transit agreement expiring in 2024.

At the same time, according to Galuzin, neither then nor now did the Ukrainian side notify “Gazprom» about the intention not to renew the agreement. Vedomosti sent a request to Gazprom.

The current contract for the transit of Russian gas through Ukraine was signed at the end of 2019 after lengthy negotiations between the parties, in which representatives of the European Commission took part. As a result, the contract was signed with the conditions that Gazprom would pay Naftogaz about $ 2.9 billion by decision of the Stockholm Arbitration, and the parties had to withdraw the claims, on which no final decision was made.

Under the terms of the contract, the volume of gas supplies over five years was to be 225 billion cubic meters. m. In 2020, Russia was supposed to pump 60 billion cubic meters through Ukraine. m, and then – 40 billion cubic meters. m per year.

In 2022, against the background of the beginning of the NWO in Ukraine, the transit of Russian gas through the territory of this country has decreased. In May, Ukraine stopped pumping gas through one of the two gas measuring stations (GIS), as this route passed through the LPR. As a result, deliveries decreased from 92-99 million cubic meters. m per day in early May to 41-43 million cubic meters. m. There are no official data on pumping through Ukraine for 2022 yet.

Analyst FG “Finam” Sergei Kaufman believes that the continuation of the transit of Russian gas through Ukraine in the current situation looks unlikely. The termination of the transit of Russian gas to the EU through Ukraine, despite the regularity of such a step on the part of Kiev in the context of the ongoing NWO, will have a significant impact on both the export of pipeline gas from the Russian Federation and the state of the Ukrainian economy, says Nikita Blokhin, senior analyst at Alfa-Bank . According to the expert, we are talking at least about the loss of export capacities in the amount of up to 15 billion cubic meters per year, as a result of which Ukraine will lose the corresponding transit payments made by Gazprom to Naftogaz of Ukraine. So the Russian export monopoly will lose a significant direction for the sale of Russian gas to the EU, and the Ukrainian budget – one of the key sources of income, the expert notes.

On the other hand, there is a general tendency for European consumers to refuse Russian gas, which, sooner or later, would lead to a further decrease in pumping volumes in this direction, Blokhin argues. At the same time, Russia will still be able to supply key consumers of Russian pipeline gas, such as Hungary and Serbia, through the export capacities of Turkish Stream, he notes. This route, according to Blokhin, will be able to provide the south of the European Union with additional supplies, since the construction of the corresponding interconnectors (links between main pipelines) was completed there a year earlier.

According to Kaufman, on the horizon of 1.5 years, the growth in supply in the LNG market will allow even the countries of Central Europe to replace Russian gas with the help of supplies through other European countries with access to the sea. The flow of gas through Turkey can also be increased, the analyst notes, but he is not sure that the EU countries will agree to import Russian gas.