Moscow- Russian natural gas exports through pipelines passing from Ukraine to Europe stopped in the early hours of Wednesday morning, the first day of the New Year, after the transit agreement expired and Moscow and Kiev failed to reach an agreement to continue flows.
Over the past few years, Russian gas supplies to Europe have decreased by about 5 times due to sanctions and counter-sanctions, after 3% to 4% of total gas imports to Europe were supplied through Ukraine, while the countries of Central and Eastern Europe (Austria) depend on Slovakia and the Czech Republic, as well as Italy (partially) receive these supplies.
Implications and warnings
One day before the end of the year 2024, the price of gas in Europe rose to the maximum in 2024 and reached $530 per thousand cubic meters.
Within the past few weeks, fuel prices have risen by 19%, or $83. In the German and Austrian markets, gas was trading at higher prices at $537.
In this atmosphere, Slovak Prime Minister Robert Fico appealed to the European Council to support the continued transit of Russian gas to Europe, warning that during the next two years the European Union countries will pay an additional amount of 120 billion euros ($124 billion) for gas and electricity if these supplies stop, unless Brussels did not respond to the call of the Slovak Prime Minister.
According to him, the damage that will be caused to the European Union countries will be 30 times greater than that of Russia, adding that the losses that Moscow will incur due to Kiev’s decision to stop gas transportation will reach only about two billion euros, and this represents only 3% of the total financial losses that will befall the member states of the European Union. The European Union of 27 countries.
Gazprom supplies Russian gas to transit through the territory of Ukraine in the quantity confirmed by the Ukrainian side, which is 37.2 million cubic metres.
The transit line through Ukraine is the only route for Russian gas supplies to Western and Central European countries.
Alternative methods
Economist Victor Lashon says that Russia and Ukraine are unlikely to sign a new gas transportation agreement in 2025, estimating the probability of the scenario of concluding a contract between Moscow and Kiev at only 1%.
He added in a comment to Al Jazeera Net that the question will remain open about how to maintain the transfer of gas from Russia through Ukraine to Europe, but Russia and Europe could theoretically agree on supplies to bypass Ukrainian restrictions, so that it will most likely be non-Russian gas in terms of ownership, and does not belong to companies. Russian.
Lashon explains that if the gas is legally owned by European companies, Ukraine can allow such supplies, because it in turn wants to maintain the crossing points, but only through communication with the Europeans, which is essentially a blackmail attempt by Kiev, as he put it.
According to Lashon’s opinion, this could be done by European companies signing an additional agreement with Gazprom to move the gas delivery point to the Russian-Ukrainian border so that the gas actually flows through the territory of Ukraine, on the condition that its ownership returns to one or another country that is the buyer of Russian gas.
No guarantees
For his part, economic affairs analyst Andrei Zaitsev believes that Russia will lose part of the revenues due to this situation, but it will compensate for it thanks to the subsequent rise in gas prices.
He continues that if Moscow is unable to agree with Europe on a formula for supplying Russian gas that allows it to bypass the restrictions imposed by Kiev, it will have the option of finding an alternative supply route, for example, through the “Turkish Stream” and then through what is known as the Balkan corridor.
But he points out that these hypotheses may not be 100% effective or guaranteed, taking into account the statements of US President-elect Donald Trump, who called on Brussels to increase supplies of liquefied natural gas from the United States to Europe.
Zaitsev says: “We must expect at this stage the possibility of Europe’s complete rejection of Russian gas, especially since it can only come through roundabout routes.”
He added: “If European countries refuse to cooperate with Russia in the gas sector, they will become dependent on the United States,” pointing out that this is exactly what Donald Trump began to achieve even before entering the Oval Office.
In his opinion, the emerging situation will lead to Russia losing part of its income in the period from January to February 2025, but at the same time it will stimulate an increase in gas prices, and this may later allow Russia to significantly compensate for the losses.
But the most profitable scenario for Russia – according to him – is the one that allows it to maintain gas supplies to its counterparts in Central Europe and gradually increase supplies to China, given that the capacity of the alternative route to supply gas to Europe via Turkey is very limited.
It is noteworthy that Dmitry Peskov, press secretary of the Russian President, confirmed on August 28, 2024, the existence of alternative routes for gas supplies from Russia to Europe, stressing the possibility of establishing a gas center in Turkey.
During the Eastern Economic Forum in September 2024, Russian President Vladimir Putin himself also described the “Turkish Torrent” as an alternative route for gas supplies to Europe if Ukraine refuses to cross.
