Europe worries Ukraine 'locks the valve' on Russian gas

Previously, Director of Ukraine's Energy Corporation Naftogaz - Alexey Chernyshov said that Ukraine will not renew the agreement to transport Russian gas to Europe when it expires at the end of 2024. According to Mr. Chernyshov, as soon as the contract is completed, the transportation will stop.

"Ukraine does not want to transport Russian gas to Europe from 2025. Since the European gas market is closely interconnected between countries, fuel may become expensive for German consumers" - Ria Novosti quoted the Focus publication.

According to Professor Svetlana Ionnikova of the Technical University of Munich (Germany), such a move by Ukraine would not only lead to higher energy prices, but also cause industrial production to shift. The analyst said that 5 to 10% of Germany's industrial production capacity could be permanently transferred abroad.

Energy policy expert at the German Economic Institute Malte Küper added that rising prices in one European country would lead to higher costs in other parts of the EU.

“If Austria experiences a gas shortage, then gas in Germany will also become more expensive,” says expert Küper.

Küper believes it is unlikely that Ukraine will turn off the gas tap for another year. Küper argues that, as part of its possible EU accession, Ukraine has an interest in continuing deliveries from Russia to Europe. Kiev does not want to disappoint its Western partners. However, it is still unclear what a gas deal with Ukraine would look like.

According to Ria Novosti, in June 2023, Ukrainian Energy Minister German Galushchenko said that the chances of reaching an agreement with Russia on extending the gas transit agreement are very slim.

At the end of 2019, Russia and Ukraine signed a five-year gas transit contract. Accordingly, Gazprom guaranteed to pump 65 billion cubic meters of gas in the first year, and 40 billion cubic meters in the next four years.