The Mitte combined heat and power (CHP) natural gas power plant operated by Vattenfall AB in Berlin, Germany, on Wednesday, January 1, 2025.
Bloomberg | Bloomberg | Getty Images
Ukraine stopped supplies of Russian gas to several European countries on New Year’s Day, ending Moscow’s decades-long dominance of European energy markets.
Russian state-owned energy giant Gazprom Confirmed Natural gas exports to Europe via Ukraine were halted at around 8am local time (5am London time) on Wednesday.
The widely expected move marks the end of a five-year transit agreement between Russia and Ukraine, with both sides unwilling to strike a new deal amid the ongoing war.
Ukrainian President Volodymyr Zelensky said last month that Kyiv was not prepared to extend shipments of Russian gas, adding: “We will not give up on the possibility of earning additional billions of dollars with our blood.”
Russia, which has been delivering natural gas to Europe through Ukrainian pipelines since 1991, said EU countries would suffer the most from the diversion of supplies. Moscow can still transport gas through the Türkiye Stream pipeline, which connects Russia to Hungary, Serbia and Turkey.
According to statistics, Ukraine will lose up to $1 billion in Russian transit fees every year due to the suspension Reuterswhile Gazprom is expected to lose nearly $5 billion in natural gas sales.
The European Commission is the executive agency of the European Union, explain It has been working with EU member states most affected by the end of the gas transport deal to ensure that the entire 27-nation bloc is prepared for such a scenario.
Slovakia, Austria and Moldova are among the countries most at risk of blackouts. According to statistics, by 2023, they will be the European countries most dependent on Russian gas transit volumes. Rystad EnergyAmong them, Slovakia imported about 3.2 billion cubic meters that year, Austria imported 5.7 billion cubic meters, and Moldova imported 2 billion cubic meters.
In this group photo released by Russian state news agency Sputnik, Russian President Vladimir Putin (right) and Slovak Prime Minister Robert Fico (left) shake hands before talks in Moscow on December 22, 2024.
Gavriel Grigorov | AFP | Getty Images
Austria insists it is well prepared for a shutdown, but other countries are more worried.
Slovak Prime Minister Robert Fico warned that Ukraine’s termination of the gas transportation agreement will “intense” Influence the EU without harming Russia. Fico also threatened to cut off power supplies to neighboring Ukraine.
The prime minister has been an outspoken critic of the EU’s support for Ukraine in the ongoing war. Unexpected visit to Moscow Talks were held with Russian President Vladimir Putin shortly before Christmas.
Moldova, which is not a member of the European Union, declared a 60-day state of emergency last month due to concerns about energy security.
A total of 56 members of Moldova’s 101-seat parliament voted in favor of imposing a nationwide state of emergency, which the government said at the time would allow the country to take a series of measures to prevent and mitigate the threat of insufficient energy resources.
“historic event”
Ukrainian Energy Minister Herman Galushenko descriptive Russia’s suspension of natural gas shipments through Ukraine is a “historic event.”
According to Google Translate, Galushenko said via Telegram on January 1: “Russia is losing markets and it will suffer financial losses.”
“Europe has decided to abandon Russian gas. Europe’s ‘Renew the EU’ initiative provides exactly what Ukraine is doing today,” he added.
In addition, Polish Foreign Minister Radek Sikorski cheer The development was seen as a political victory, with Russia accusing Putin of trying to “blackmail Eastern Europe by threatening to cut off gas supplies”.
On November 18, 2024, steam clouds from the OMV refinery rose into the morning sky in the small town of Schwechat on the outskirts of Vienna, Austria.
Joe Lamar | AFP | Getty Images
Latest data compiled by the European Gas Infrastructure Industry Group programme The EU’s natural gas storage facilities are approximately 73% full. In Germany, Europe’s largest economy and largest natural gas consumer, inventories are now close to 80%.
Christoph Halser, natural gas and LNG analyst at Rystad Energy, said: “If Azerbaijan or other third parties do not transship gas after reaching a swap agreement with Russia, the EU will need to purchase approximately 7.2 billion cubic meters of natural gas from the LNG market. ” said in a research report.
“Terminals in Poland, Germany, Lithuania and Italy can forward these cargoes to the most affected countries, such as Slovakia and Austria.”
Europe’s energy security
Henning Groostein, practice leader of Eurasia Group’s energy, climate and resources team, said Ukraine’s decision to stop supplying Russian gas to the EU was not surprising, given that Kyiv and Moscow have long expressed reluctance to renew the deal. under war conditions.
Glostein said in a research note that the deal’s expiration would not threaten the EU’s winter energy security, citing measures taken by EU importers to prepare for supply cuts and mild winter weather across much of Europe.
Eurasia Group’s Glostein said gas price trends in the coming months may depend on political developments in the Russia-Ukraine war and remaining winter weather conditions.
“On the political front, negotiations are ongoing between some EU member states (such as Slovakia, where many of Ukraine’s pipelines enter the EU), Russia and Ukraine to find compromises that might restore some supplies. However, negotiations around the end of the year have made no progress, ” said Groenstein.
“On the weather front, above-average temperatures are currently expected for the remainder of the European winter, meaning the impact of production cuts will be limited,” he added.
According to reports, the front-month natural gas price at the Dutch TTF Center, the European natural gas trading benchmark, rose 1.2% on Thursday to 49.49 euros ($51.1) per megawatt hour. New York Intercontinental Exchange.
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