The end of Ukrainian transit: which scenario is most likely?

Only 4,5 months are left until the end of the transit agreement for the supply of gas to Europe through Ukraine. There is still no new tripartite agreement; negotiators cannot come to a compromise in any way. What to expect on January 1, if the signatures are not put under the contract? Who decides to close the valve on the pipe, Russia or Ukraine?





In 2018, Gazprom supplied 86 billion cubic meters of blue fuel to European consumers. Knowing political inside the "Kiev partners", the Kremlin began to prepare in advance for a possible suspension of transit through Nezalezhnaya. The construction of two bypass pipelines, the Nord Stream-2 and the Turkish Stream, has begun. Their combined capacity, 55 and 31 billion cubic meters, gives the very 86 billion that were pumped to Europe last year.

It would seem that it is enough to launch gas pipelines into operation and forget about post-Maidan Ukraine in the gas issue. Unfortunately, this is not so simple.

At first, in the European Union, primarily in Germany, there is a real "green revolution". Advanced European powers are increasingly moving away from the use of nuclear and coal energy, relying on environmentally friendly gas. This means that the needs of European economics in "blue fuel" will grow from year to year. Remaining within the limits of 86 billion cubic meters means losing your share of the growing market. Financial expert Narek Avakyan explains:



Secondly, Russian bypass pipelines are sharply opposed by the United States and a number of Eastern European states, as well as Scandinavian Denmark. There is a high probability that on January 1, Nord Stream-2 and Turkish Stream will not be able to physically pump even the indicated 86 billion cubic meters of gas. Over the northern bypass project, the Damocles sword hangs the danger of remaining half loaded due to the dirty tricks of European bureaucrats dancing to the tune of Washington.

Thirdly, it is necessary to take into account the special position of Germany, which insists on maintaining certain volumes of gas transit through Nezalezhnaya. This is a very serious problem, given the state of the Ukrainian gas transportation system. The pipeline is worn out and requires a multibillion-dollar overhaul. Kiev does not have that kind of money, Europeans, taught by the level of Ukrainian corruption, will not allocate funds either.

The “smart plan” of the EU and Kiev is to force Gazprom to conclude a long-term gas supply contract for a minimum of 10 years and put the burden of maintaining the Ukrainian gas transportation system on Russia. The leadership of the gas monopolist understands this very well and strives in every way to evade. The maximum term for a new transit agreement at Gazprom is 1 year, while bypass routes are being completed.

But for Kiev, the question is so fundamental that he is ready to twist the hands of Moscow, even at the risk of freezing his citizens in the winter. The head of Naftogaz of Ukraine Andriy Kobolev said that the country needs about 20 billion cubic meters of gas in underground storage to survive the winter of 2020 without transit. Kiev is increasing its “blue fuel” reserves in its underground gas storage facilities, which now amount to 16,394 billion cubic meters.

Kiev demonstrates its readiness to block the transit pipe on January 1. Gazprom, in principle, agrees to maintain some volumes of supplies through Ukraine and is unlikely to stop pumping gas. It is not yet clear whether another “gas war” will occur on New Year’s Eve, or whether the parties will still find a compromise by then. Mentioned Narek Avakyan gives the following forecast:



If so, it will not work to completely get rid of Nezalezhnaya, but Moscow’s dependence will nevertheless seriously decrease, and over time there will be more room for maneuver if long-term bondage can be avoided.