EU sees "no need", Moscow seeks alternative routes

On February 15, European Union (EU) Energy Commissioner Kadri Simson said that the bloc sees no need to extend the agreement to transport Russian gas to Europe via Ukraine. This gas transport agreement expires at the end of this year.

EU states its position on extending the agreement on Russian gas transit through Ukraine. (Source: Tylaz)

Speaking at a European Parliament committee meeting, Ms Simson said EU analysis showed that countries on the gas transit route - including Austria, Italy and Slovakia - would be able to find alternative supplies.

“We have no intention of extending the trilateral gas transit agreement with Russia, which expires at the end of this year,” Ms. Simson said.

Europe is looking to wean itself off Russian gas imports, after Moscow cut off gas supplies to the region since its military operation in Ukraine in February 2022.

Analysts say the termination of the gas transit agreement through Ukraine may cause a slight increase in gas prices in Europe but will not affect Europe's overall energy security.

Kiev had previously announced that it would not enter into negotiations with Moscow on extending the pipeline transit agreement.

Kremlin spokesman Dmitry Peskov also said that Russia will look for alternative routes to export gas if the agreement with Ukraine is not extended.

According to data from European operators, in 2023, Russian pipeline gas will account for less than 10% of total EU imports, down from around 40% in 2021.

More than half of this gas passes through Ukraine, using only 10% of the pipeline capacity, bringing in annual revenue of 800 million USD to Kiev, equivalent to 0.46% of Ukraine's Gross Domestic Product (GDP).

The said amount is mainly used to pay for essential operating costs, including routine pipeline maintenance, and hardly covers related costs.

With the current shipping contract set to expire at the end of this year, a major turning point is imminent. If the deal is renewed, it is likely to see changes in the volume and structure of the deal.

Under the existing five-year contract with Ukraine, Russia is to transport 109 million cubic metres of gas daily. Once the deal expires in December, that will likely drop to 40 million cubic metres a day – the current flow through Kiev – further reducing revenues.

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