European Union Sees No Necessity for Extension of Gas Transit Agreement with Russia via Ukraine

The European Union (EU) is indicating that there is no need for an extension of the gas transit agreement to transport Russian gas to Europe via Ukraine, prior to the contract’s expiration, as stated by the bloc’s chief energy policy officer, according to Reuters on Thursday.

Energy Commissioner Kadri Simson conveyed that, based on EU analysis, countries like Slovakia, Italy, and Austria, which are served by the gas transit route, will be able to secure alternative supplies. Simson stated during an EU Parliament committee meeting, “We have no interest to prolong the trilateral gas transit agreement with Russia, which will expire by the end of this year.”

The preliminary analytics suggest that alternative solutions exist to supply these countries that still receive some gas through the Ukrainian route, according to Simson.

Following Russia’s halt of gas supplies to Europe in the aftermath of its conflict with Ukraine in February 2022, Europe is actively working to reduce its dependence on Russian gas imports.

S&P Global Commodity Insights estimates that approximately 12 billion cubic meters (bcm) of gas are delivered to Europe annually through Ukraine, a notable decrease from the pre-war supply of 155 billion cubic meters annually. Analysts suggest that if the Ukraine transit agreement were to end, gas prices in Europe might experience a slight increase, but overall energy security would not be compromised.

To mitigate Moscow’s supply, EU nations have invested significantly in renewable energy and liquefied natural gas (LNG). Additionally, a decline in gas demand, partly due to weak industrial activity, has supported the EU’s efforts to diversify energy sources.

Under the terms of the five-year pipeline transit agreement between Moscow and Kyiv, Russia pays Ukraine for using its pipeline network to export gas to Europe. However, discussions with Russia about extending the agreement are not expected to take place, according to Ukraine. In the absence of an extension, Russian gas exports are anticipated to find alternative routes, as mentioned by Kremlin spokesman Dmitry Peskov last month.



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