European officials are reportedly negotiating for Russia to resume natural gas supplies via a pipeline through Ukraine Bloomberg With reference to sources. The current transit agreement expires at the end of this year, and European government and company officials are discussing with their Ukrainian counterparts how to ensure gas supplies in 2025.
According to some sources, one of the options discussed is for European companies to buy gas from Azerbaijan and pump it into Russian pipelines leading to Europe. The agency says such an arrangement would allow Europe to avoid the difficulties of purchasing Russian gas at a time when Moscow is trying to limit its revenues amid the conflict in Ukraine.
“The idea is gaining momentum as it becomes clear that Ukraine will support it,” writes Bloomberg. Gas transit revenues reached nearly $1 billion in 2021, providing significant funding to the war-torn economy.
There are also concerns that disused pipelines could become military targets, fall into disrepair and be expensive to repair.
“Ukraine has an incredible gas transportation and storage infrastructure that needs to be exploited. “Ukraine wants to use this infrastructure because it brings many benefits,” Alexey Chernyshov, general director of Ukrainian state-owned Naftogaz company, told Bloomberg.
He rejected any plans for cooperation with Russia’s Gazprom and said gas supplies from Azerbaijan “could have a future”.
Negotiations are still at an early stage. Sources expect decisions to be made only by the end of the year, when the expiration of the current agreement and the onset of the European winter will increase the pressure on negotiators.
Some sources said that German gas giant Uniper would also participate in the discussions. The company was nationalized by the German government last year due to the energy crisis at the end of 2022. Uniper declined to comment and a spokesman for Germany’s economy ministry said the government was negotiating within the European Union.
Slovakia would be one of the key countries that could benefit from such an agreement, and Prime Minister Robert Fico spoke about the possibility during a trip to Azerbaijan in May.
“The coordination of economic and price conditions depends on negotiations between Gazprom, Azerbaijani and Ukrainian companies,” Fico said. “If they do this, Slovakia will be able to import gas from Azerbaijan, some of it will remain in Slovakia, and some of it will go to other countries.”
15 billion cubic meters per year
According to Bloomberg estimates, Russia continues to supply European countries with about 15 billion cubic meters of gas per year. Europe also imports Russian liquefied natural gas by sea and does not impose sanctions as it does with oil. At the same time, the EU announced plans to phase out Russian gas by 2027. Fuel supplies from Russia mostly go to Austria and Slovakia.
The transit line through Ukraine remains Russia’s only route for gas supplies to Western and Central European countries after the collapse of Nord Stream. Russia’s natural gas supply has been supplied through Ukraine in decreasing amounts since May 2022.
In March, Ukrainian Energy Minister German Galushchenko said that Ukrainian authorities do not plan to extend the gas transit contract with Gazprom after December 31, 2024.
The Russian Direct Investment Fund predicts that the losses of European Union countries due to the decrease in Russian gas supply will reach 700 billion Euros this year and that this loss will rise to 1 trillion Euros by the end of 2024. According to RDIF chairman Kirill Dmitriev, losses are due not only to high LNG prices, but also to serious industrial losses in European countries.
What are you thinking?
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.