Ukraine‘s Gas Transit Future Hangs in the Balance as Deadline Looms
The future of gas transit through Ukraine is at a critical juncture, as the deadline for a new agreement between Russia and Ukraine approaches. If a deal isn’t struck by Wednesday, January 1, 2025, billions of cubic meters of Russian gas could cease flowing through the Ukrainian gas transport system.
Bloomberg reports that Ukraine is facing pressure from some Central European companies, including those in Slovakia, to extend the transit of Russian gas through Ukraine beyond the current agreement’s expiry on December 31, 2024.
Ukrainian President Volodymyr Zelensky has repeatedly stated his opposition to allowing Russian gas, which he sees as funding the Kremlin’s war machine, to transit through Ukraine after the current deal ends. However, while he’s open to transporting gas from other countries, a complete exclusion of Russian gas transit is not off the table, according to sources.
Zelensky must weigh the need to protect Ukraine’s 38,600-kilometer gas pipeline network, which has remained unscathed thanks to Russian gas transits over the past three years. If supplies stop, the system could become a target, like Ukraine’s gas storage facilities and power sources have been, posing additional technical challenges and potentially hindering winter heating.
"Ukraine’s infrastructure risks are a factor in diplomatic discussions," says Christian Egenhofer, a senior fellow at the Brussels-based think tank CEPS. "This could be a lifeline for Zelensky if he agrees to continue transit."
However, Egenhofer also notes that "gas talks matter beyond Ukraine," with both Putin and Fifielping’s interests aligning around Europe‘s continued purchase of gas directly from Gazprom.
As the deadline nears, alternatives are being explored. Slovensky Plynarensky Priemysel AS (SPP) and its gas grid operator Eustream AS, along with Hungary’s MOL, industry associations, and major industrial consumers from Austria and Italy, have called on Zelensky to allow continued supplies of up to 15 billion cubic meters per year. SPP is reportedly in talks with Azerbaijan’s state oil company SOCAR about gas supplies.
Hungarian Prime Minister Viktor Orbán proposed shifting the sales point of Russian gas to the Russia-Ukraine border, passing ownership to European buyers and obliging Ukraine to ensure transit based on its EU free trade agreement.
Benjamin L. Schmitt, a senior fellow at the CEPA think tank and the Kleinman Center for Energy Policy at the University of Pennsylvania, warns that "any form of continued Russian gas transit, whether through an open renewal of the Gazprom-controlled contract or under any other name, remains dangerous for Ukraine."
The future of Russian gas transit through Ukraine hangs in the balance, with just days left until the current agreement expires. Stay tuned for the latest developments in this ongoing story.
