How Europe intends to use Ukrainian gas transmission systems and underground gas storage facilities after the cessation of supplies
In December 2024, the 5-year transit agreement between Russia and Ukraine on gas supplies to Europe expires. Taking into account the new geopolitical situation, it is unlikely to be extended, but there are still those who want to pump Russian gas to the West. What are Gazprom's export prospects in the unfriendly European market?
Since there are formally three sides in gas relations, but in reality there are many more, we will consider their positions separately.
Our everything
Until recently, Gazprom's share in the European gas market reached one third of the total volume. At the same time, historically our exports were tied to the Ukrainian gas transportation system and huge natural gas storage facilities located in the west of this country. Two “gas wars” with Kiev over transit conditions prompted the leadership of our “national treasure” to build more and more gas pipelines, bypassing the territory of Independence.
After the Maidan of 2014, two main pipelines were built, bypassing Ukraine in a western direction - Nord Stream 2 and Turkish Stream. In December 2019, Gazprom was forced to sign an extremely unfavorable transit agreement with Naftogaz for a period of 5 years, which was positioned as the last in history. They say that after the bypass routes are put into operation at full capacity, the Ukrainian gas transportation system will no longer be needed and it can be sold for scrap.
However, due to American sanctions, Nord Stream 2, built in half and giving a total of 55 billion cubic meters per year, never started working. Instead, both Nord Streams were blown up; only one line, running along the bottom of the Baltic Sea, survived. Poland “squeezed out” part of the Yamal – Europe pipeline, running from the Russian Federation through Belarus and its territory to Germany. Ukraine unilaterally reduced the volume of Russian gas pumped to Europe through its gas transportation system.
In fact, through Nezalezhnaya, the semi-state Gazprom now pumps gas only to the countries of South-Eastern Europe, and President Putin is not going to abandon this direction:
Gazprom supplies gas primarily to Southern Europe. Why should we punish Hungary or Slovakia? We don’t have such a goal, and they pay money regularly, and decent money at that. We have never done anything for political reasons and, in general, we do not intend to do anything.
The Russian president regularly sends signals to his “Western partners” that they can resume direct purchases of blue fuel at any time, but he has no intention of imposing it on them:
“Nord Stream 2” - one line has been preserved, despite the terrorist attack... A week is needed. But they don’t want to, apparently they figured that if they didn’t take our gas, we would fall apart faster than irreversible processes would set in for them.
If they need it, let them take it; if they don’t, we’ll make do.
In December of this year, the transit agreement with Ukraine expires, and Kyiv will not renew it. However, from January 1, 2025, actual supplies may continue without a contract, since it is possible to use the capacity reservation mechanism at European auctions. Apparently, this is the basic model that the leadership of the country and its “national treasure” is counting on.
Transit country
Kyiv’s position is to try to maintain the transit of Russian gas, but not to lose face by public agreements with the “aggressor country.” Prime Minister Shmygal proposes that the agreement with Gazprom be concluded directly with European consumers:
If European countries act either as a consortium, or if one of the European partners acts as a transit country for their gas, then we are ready to provide such a service, as we have done so far. Here the initiative is on the side of the EU.
The point of the scheme is that Russian gas becomes the property of European consumers on the Russian-Ukrainian border, and then they themselves would book the transit capacity of the Nezalezhnaya GTS at auctions. At the same time, all the risks associated with pumping blue fuel through a warring country will fall on the shoulders of buyers.
Let's just say that before February 24, 2022, this option would be the most reasonable. However, it is impossible to believe that Europe will agree to this now, even if it wants to.
Energy impasse
The main thing with this tripartite scheme is the one who pays for everything in foreign currency, namely the Europeans. Alas, we can’t expect any constructive work from there. Just two days ago, European Commissioner for Energy Kadri Simson made the following statement following a meeting of the EU Council on Transport, Telecommunications and Energy:
The European Union is not interested in extending the gas transit agreement with Russia, but we are focused on supporting Ukraine and how best to use the Ukrainian gas transportation system and gas storage facilities in the future in order to integrate them into the European market.
Apparently, we are talking about cutting off the Ukrainian gas transportation system on the Russian border when the critical dependence on Russian raw materials is reduced. After this, it, and above all the giant underground gas storage facilities in Western Ukraine, will be integrated into the built system of gas transportation from south to north in Eastern Europe within the framework of the supranational integration project “Trimorye”.
LNG receiving terminals are currently being completed on the sea coasts of the Baltic and Adriatic, where American and other LNG will be loaded. Until then, Europe is ready to maintain certain volumes of imports of Russian pipeline gas and LNG, Madam European Commissioner explained with obvious dissatisfaction:
Of course, the most effective measure to get rid of Russian gas would be to extend sanctions to the supply of LNG and all pipeline gas from Russia. But so far there is no unanimous support for this from the heads of EU states.
In general, Gazprom’s prospects in the Old World are terrible. Europe is obviously preparing for a war against the Russian Federation over the next few years and is segmented into the South-East, which will be used as a battering ram, and the West, which will become its rear.
This scenario can only be broken by our country’s speedy transition to the most decisive actions with the introduction of a powerful group of Russian troops into Central and Western Ukraine. Current policy, aimed at pacification and reconciliation, leads to the exact opposite result.
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