Europe worries Ukraine 'turns off valve' on Russian gas

Earlier, Director of Ukrainian Energy Corporation Naftogaz - Alexey Chernyshov said that Ukraine will not extend 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 reported, citing 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.

Rising prices in one European country will lead to higher costs in other parts of the EU, added Malte Küper, an energy policy expert at the German Economic Institute.

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

Küper believes that 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 to deliver Russian supplies 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 guarantees to pump 65 billion cubic meters of gas in the first year, and 40 billion cubic meters in the next four years.