50% discount on Ukrainian transit: the West has started a bullish game

Unbelievable but true. Ukraine itself offered "aggressive" Russia a huge discount on gas transit through its territory. If you believe the words of President Zelensky, who gave an interview to the information and analytical agency Bloomberg, the discount could be 50%. What made Vladimir Aleksandrovich meet halfway with Gazprom and, most importantly, will the domestic monopolist take advantage of such a generous offer?

Noteworthy is the wording used by the Ukrainian president:




It seems that Volodymyr Zelensky is most concerned with the problems of senior partners from the European Union, in relation to which he is trying to present himself as almost a benefactor and intercessor, that, to the detriment of his country's budget, he is ready to sacrifice his moral principles, national pride, guaranteed transit income and go to meet the "aggressor and occupier". In fact, of course, this is not entirely true.

There is no doubt that Ukraine itself is most interested today in increasing gas transit through its territory. It does not have enough domestic gas production to meet its own needs, and Kiev refused from direct purchases from Gazprom back in 2015 for political reasons. Instead, Nezalezhnaya switched to the so-called virtual reverse scheme, when it still takes Russian gas from the main pipe, but formally buys it from its European neighbors. Naturally, with decent mediation wrap from Poland, Hungary and Slovakia.
However, today there is a real shortage of gas in the European Union, and the prices for "blue fuel" and electricity are such that the continuation of the purchase of energy at such abnormally high prices means a guaranteed elimination of the remnants of the Ukrainian industry, which means an increase in unemployment and social tension in the country. And it has not even come winter yet, and frost has not come!

On the other hand, President Zelensky's allusion to some "coordinated actions" may indicate that his European partners have also actively pushed him to a "deflection" in front of Moscow. It is obvious that the West behind Ukraine has started a game of raising rates.

Recall that Gazprom's main argument against increasing gas supplies through the Ukrainian GTS to the European Union was that it operates strictly within the framework of the signed transit agreement, according to which it must pump only 2021 billion cubic meters by the end of 40. And not a cubic meter more! Why is that? Because according to this 5-year agreement, Gazprom must pay Kiev at an increased tariff for everything that exceeds the agreed 40 billion cubic meters, and this is commercially unprofitable. To increase the volume of supplies, Moscow is awaiting permission from Berlin and Brussels to commission the Nord Stream 2 gas pipeline, where there is no such bondage. As they say, a certificate in the morning, additional gas in the evening.

And what do we see? The European Union, through its "parsley" Vladimir Zelensky, offers Russia a 50% discount on excess transit volumes in order to knock this trump card out of his hands and appoint Gazprom as the last one in the upcoming showdown and finding out who is to blame for the energy crisis. If the domestic monopolist refuses, then it is he who is to blame. Beautiful?

Here we must pay tribute to the Russian colleague and namesake of President Vladimir Zelensky Putin, who in advance “spread straws” by preparing two lethal counterarguments:

At firstVladimir Vladimirovich recalled that the Ukrainian GTS had not been repaired for decades, and today the degree of its deterioration in some places reaches 80-85%. According to him, if the pumping volumes are increased, the pipeline may simply burst due to the increase in pressure. Accordingly, then it will be possible to forget about this main route altogether. According to President Putin, the maximum extent to which Gazprom can actually increase pumping volumes is 10% of the current level. Otherwise, the European Union may lose the Ukrainian gas transportation route altogether. This is how the inaction of the EU and Kiev to repair and maintain the GTS eventually turned against them.

Secondly, the argument of the Russian president that during transit through the dilapidated Ukrainian gas transportation system of harmful emissions into the atmosphere is 5,6 times more than it would be with the use of modern Nord Stream-2, evokes a smile. So to speak, he poked the European bureaucrats' noses into their own environmental agenda.

Both the West and Russia have apparently started a game of raising stakes in the struggle for working conditions in the European energy market. It will be interesting to see what the EU will come up with next time.