By Alexander Miller, consultant in energy markets – Eurasia Business News, August 28, 2024. Article n°1194.

The Ukrainian President Volodymyr Zelensky said that Ukraine will not renew the agreement with Russia on gas transit, which expires at the end of 2024.

“No one will continue the agreement with Russia [on gas transit through Ukrainian territory]. Here we put an end to it. As for the transit of gas from other companies, if the request of some of our European partners continues, we will then consider other issues,” Zelensky said at a press conference on August 27.

On December 30, 2019, Naftogaz of Ukraine and Gazprom signed a contract valid until the end of 2024, which provided for the pumping of 225 billion cubic meters of gas: 65 billion cubic meters in 2020 and 40 billion cubic meters each over the next four years. Gazprom has to pay about $1.25 billion a year for transit. At the end of October 2023, the chairman of the board of Naftogaz, Oleksiy Chernyshov, said that there were no plans to extend the contract.

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Transit through Ukraine is one of the two remaining routes for the supply of Russian gas to Europe through pipelines. The second is the line of the Turkish Stream gas pipeline, through which gas goes to the Turkish market.

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Transit through Ukraine accounts for about half of Gazprom’s exports to Europe. In July last year, Vedomosti wrote that, according to experts, Gazprom’s annual revenue from gas exports in transit through the Ukrainian GTS is about $5.3-6 billion (based on an average price of $350-400 per 1000 cubic meters), that is, about $3.7-4.2 billion after the company pays the export duty.

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On August 8, Gazprom reduced gas transit through the Ukrainian gas transmission system (GTS) by 5% compared to the previous day and by 12% by August 6, after Ukrainian armed forces entered the Russian territory in the Kursk region. The fall occurred amid hostilities in the Sudzhansky district of the Kursk region, where the Sudzha gas metering station (GIS) is located – the only one today through which fuel is pumped to Ukraine.

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© Copyright 2024 – Eurasia Business News. Article No. 1194.