The deadline for reaching an agreement on continuing the transit of Russian gas through Ukraine to Europe is approaching, with the current agreement set to expire on December 31, 2024. Without a solution, billions of cubic meters of gas could be blocked, putting the region at risk of energy shortages during the winter.
Slovak Prime Minister Robert Fico and central European energy companies are pressuring Ukraine to keep gas flowing from the Russian border through its 38,600-kilometer pipeline, Bloomberg reported. Slovakia and Hungary, two countries that still rely on cheap gas from Russia’s Gazprom, are confronting Ukrainian President Volodymyr Zelensky’s tough stance.
Mr. Zelensky has declared that he will not allow Russian gas to continue transiting through Ukrainian territory. However, he is ready to consider transporting gas from other countries if there is a request from the European Union (EU).
Meanwhile, Slovakia has threatened to cut off electricity supplies to Ukraine if the gas route is blocked. Prime Minister Fico also said that stopping gas transit through Ukraine would cost the EU around 120 billion euros in additional energy costs over the next two years.
Stopping gas transit would not only affect Europe, but also pose a direct threat to Ukraine. The country’s gas pipeline system, which has not been attacked during the three-year conflict, could become a target if Russia no longer has a vested interest in using it. It would also create technical difficulties in keeping Ukrainian households warm during the cold winter.
Continuing gas transit through Ukraine could be a “lifeline” for Mr. Zelensky, according to Christian Egenhofer, a senior fellow at the Center for European Policy Studies (CEPS). This would help protect the country’s critical energy infrastructure and avoid greater short-term losses.
Faced with the risk of no deal, European countries are looking for alternatives. Slovakia has been negotiating with Azerbaijan's state oil company (Socar) to import gas from Azerbaijan through a swap deal with Gazprom.
Hungary has proposed moving gas trading to the border between Russia and Ukraine, where gas would be sold directly to European companies. This would force Ukraine to secure gas transit under free trade agreements with the EU.
However, these solutions face major obstacles because of Gazprom's long-term contracts with gas-buying countries.
For both Mr Putin and Mr Fico, the most profitable option would be for European buyers to continue buying gas directly from Gazprom. Then Russia would remain in the EU market without having to share revenues with intermediaries, and Slovakia would save on additional transit costs.
The Ukrainian Foreign Ministry said on December 27 that negotiations were ongoing and a last-minute deal could not be completely ruled out.
Unlike previous crises, the EU this time did not directly intervene in negotiations between Kiev and Moscow.
European gas prices have risen 48% this year, on expectations of supply cuts combined with rapidly depleting gas reserves due to cold weather.
