The statement comes shortly after a group of major Central European companies called on the EU to support the continuation of the transit contract.
According to Bloomberg, gas prices in Europe increased by 4.4% on December 17, the strongest increase since mid-November, after the European Commission confirmed that it was ready to end the Russia-Ukraine gas transit agreement by the end of this year.
Sprint to avoid supply disruptions
Time is running out, with the current deal between Russia and Ukraine set to expire at the end of the year. Eastern European countries, which have relied on cheap Russian gas, are under intense pressure. If the flow is cut off, gas prices risk skyrocketing and the race for alternative supplies will intensify, especially as European reserves are already unusually low.
Major companies such as Slovakia's SPP, Hungary's MOL and energy groups from Austria, Italy and Slovakia have signed a joint statement calling for the maintenance of the transit contract. "We will send this statement to the President of the European Commission Ursula von der Leyen so that she is aware of the threat to energy security and the economy in the region," said Vojtech Ferencz, Chairman and CEO of SPP.
Escalating tensions: EU at a crossroads
The EU's statement raised concerns among many parties when it affirmed: "The Commission is not interested in continuing the transit of Russian gas through Ukraine. The EU is ready with alternative options."
While Europe has reduced its dependence on Russian gas following the Ukraine conflict, landlocked countries like Slovakia and Hungary remain heavily reliant on the cheap supply. A halt to transit would not only push up prices but could also cause gas shortages during a cold winter.
Slovakia's representative, Deputy Prime Minister Denisa Sakova, said the country is urgently negotiating with many partners, including Russia's Gazprom, to find a solution to supply and transit 15 billion cubic meters of gas - equivalent to the current volume through the Ukrainian pipeline.
The waiting damage: Who will bear the brunt?
According to SPP, stopping gas transit will cost Slovakia more than 220 million euros in costs to purchase and transit from alternative sources. Meanwhile, Ukraine has also warned that its gas infrastructure will suffer "irreversible" losses if the flow is interrupted.
Although the EU insists the impact on gas prices will be “negligible”, the market is still under pressure. “If a severe winter occurs, gas shortages and supply disruptions across Europe are inevitable,” Ferencz warned.
In that context, Ukraine declared its readiness to cooperate with the EU to transit gas from sources other than Russia if requested.
According to Bloomberg, the European gas crisis is at a critical juncture as the EU is determined to cut off Russian supplies, but the price to pay could be price escalation and great pressure on the economies of Central and Eastern European countries.
