Russia will stop gas supply to European countries including Austria.
MOSCOW/LONDON/VIENNA: Russia told Austria on Friday it would suspend gas deliveries through Ukraine on Saturday. After this, there has been a stir in all the countries of Europe. It is a development that signals the imminent end of Moscow’s last gas flows to Europe. Let us tell you that this is Russia’s oldest gas-export route to Europe. Which has been running through Ukraine since the Soviet era. But this gas pipeline going to Europe via Ukraine is also going to be closed at the end of this year. Due to this, the whole of Europe may have to face gas supply problems.
Ukraine has said it will not extend a transit agreement with Russian state-owned Gazprom (GAZP.MM). The Russian gas producer will stop deliveries of natural gas to OMV through Ukraine. After the existing five-year agreement between Russia and Ukraine expires, the supply of Russian gas to Europe via Ukraine may stop completely from January 1, 2025. Because Kiev has refused to negotiate new terms of transit with Moscow during the war. If Russian gas transit through Ukraine stops completely, who will be most affected?
There will be panic in Europe
Russian gas supplies to Europe via Ukraine are relatively small. Russia sent about 15 billion cubic meters (bcm) of gas through Ukraine in 2023, which is only 8% less than the total Russian gas flowed through various routes to Europe in 2018-2019. Russia has spent half a century building up its share of the European gas market. Which was once up to 35% at its peak. But Moscow lost share to rivals such as Norway, the United States and Qatar after its invasion of Ukraine in 2022, prompting the EU to cut its dependence on Russian gas.
Gas prices skyrocketed in Europe
EU gas prices set to hit record high in 2022 after Russian gas supply cuts. The Soviet-era Urengoy-Pomory-Uzhgorod pipeline brings gas from Siberia through the city of Sudza in Russia’s Kursk region – now under the control of Ukrainian military forces. Then it flows through Ukraine to Slovakia. In Slovakia, the gas pipeline splits into branches leading to the Czech Republic and Austria. Austria still gets most of its gas through Ukraine, while Russia accounts for about two-thirds of Hungary’s gas imports.
Slovakia takes about 3 bcm from energy giant Gazprom (GAZP.MM) opens new tab per year, about two-thirds of its needs.
How far does the gas go from Russia?
The Czech Republic almost completely stopped importing gas from the east last year, but is planning to start taking gas from Russia in 2024. Most other Russian gas routes to Europe are closed, including Yamal-Europe through Belarus and Nord Stream under the Baltic. The only other operational Russian gas pipeline routes to Europe are Blue Stream and TurkStream under the Black Sea to Türkiye. Türkiye sends some Russian gas volumes to Europe, including Hungary.
Many European countries still want gas from Russia
Does the Ukrainian route of gas supply still work? While the remaining Russian gas lines are limited. This issue remains a dilemma for the EU. Several EU members such as France and Germany have said they will no longer buy Russian gas, but the stance of Slovakia, Hungary and Austria, which have close ties to Moscow, challenges the EU’s general approach. Countries that still receive Russian gas argue it is the most economical fuel and also blame neighboring EU countries for charging high transit fees for alternative supplies. Based on an average gas price of $200 per 1,000 cubic meters, Russia earns more than $3 billion on sales through Ukraine, according to Reuters calculations. (Reuters)
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