Moscow/London/Vienna Russia told Austria on Friday it would suspend natural gas shipments through Ukraine on Saturday. Since then, there has been an uproar in various European countries. The development marks the end of Moscow’s final gas deliveries to Europe. Let us tell you that this is the oldest European gas export route from Russia. This has been true throughout Ukraine since Soviet times. But the natural gas pipeline to Europe via Ukraine will also be closed at the end of this year. As a result, Europe as a whole may have to face a gas supply crisis.
Ukraine said it would not extend its transit agreement with Russia’s state-owned Gazprom (GAZP.MM). Russian gas producers will stop supplying gas to OMV through Ukraine. Russia may completely stop gas supplies to Europe through Ukraine from January 1, 2025, after the existing five-year agreement between Russia and Ukraine expires. Because Kiev refused to negotiate new transit terms with Moscow during the war. If Russian gas shipments through Ukraine stop completely, who will be most affected?
There will be panic in Europe
Russia supplies relatively little natural gas to Europe via Ukraine. In 2023, Russia will transport about 15 billion cubic meters (bcm) of natural gas through Ukraine, which is only 8% less than the total volume of natural gas Russia transported to Europe via various routes in 2018-2019. Russia has spent half a century expanding its share of the European gas market. It reached a peak of 35%. But an invasion of Ukraine in 2022 saw Moscow lose its share to rivals such as Norway, the United States and Qatar, prompting the EU to reduce its reliance on Russian gas.
European natural gas prices soar
EU gas prices are set to hit record highs in 2022 following Russian gas supply cuts. The Soviet-era Urengoy-Pomory-Uzhgorod pipeline carries natural gas from Siberia to the city of Souza in Russia’s Kursk region – now controlled by Ukrainian forces. It then flows through Ukraine to Slovakia. In Slovakia, natural gas pipelines branch off to the Czech Republic and Austria. Austria still imports most of its gas through Ukraine, while Russia accounts for about two-thirds of Hungary’s gas imports.
Slovakia gets about 3 bcm a year from energy giant Gazprom Gazprom (GAZP.MM) Open New Tags, about two-thirds of its needs.
How far is natural gas from Russia?
The Czech Republic almost completely stopped importing gas from the east last year but plans to start importing gas from Russia in 2024. Most of Russia’s other gas routes to Europe are closed, including Yamal-Europe through Belarus and Nord Stream in the Baltic Sea. Russia’s only other operating natural gas pipelines to Europe are Blue Stream and Türkiye Stream from the Black Sea to Turkey. Türkiye ships some Russian natural gas to Europe, including Hungary.
Many European countries still need Russian gas
Are Ukraine’s gas supply routes still valid? The remaining Russian gas pipelines are limited in number. The issue remains a dilemma for the EU. Several EU members, including France and Germany, have said they will no longer buy Russian gas, but the stance of Slovakia, Hungary and Austria, which have close ties to Moscow, challenges the EU’s overall approach. Countries that still receive Russian gas consider it the most economical fuel and accuse neighboring EU countries of charging high transit fees for alternative supplies. At an average natural gas price of $200 per 1,000 cubic meters, Russia’s sales revenue through Ukraine exceeds $3 billion, Reuters calculated. (Reuters)
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