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What takes place when Russian gas to Europe via Ukraine stops?

Austria's energy business OMV was informed by Gazprom that the Russian gas manufacturer would stop shipments of natural gas through Ukraine to OMV from 0500 GMT on Nov. 16 following OMV winning an arbitration case. Products of Russian gas to Europe by means of Ukraine might entirely stop from Jan. 1 2025 after the current fiveyear offer ends as Kyiv has actually refused to work out the brand-new terms of the transit with Moscow during the war.

Here is what takes place if Russian gas transit through Ukraine is completely switched off and who will be impacted most.

HOW BIG ARE THE VOLUMES?

Russian gas materials to Europe via Ukraine are fairly little. Russia shipped about 15 billion cubic metres (bcm) of gas through Ukraine in 2023 - just 8% of peak Russian gas flows to Europe through numerous routes in 2018-2019.

Russia spent half a century developing its European gas market share, which at its peak stood at 35%.

Moscow lost its share to rivals such as Norway, the United States and Qatar since the invasion of Ukraine in 2022, prompting the EU to cut its dependence on Russian gas.

EU gas prices rallied in 2022 to tape-record highs after the loss of Russian supplies. The rally won't be duplicated offered modest volumes and a little number of customers for the remaining volumes, according to EU officials and traders.

UKRAINIAN ROUTE

The Soviet-era Urengoy-Pomary-Uzhgorod pipeline brings gas from Siberia by means of the town of Sudzha - now under control of Ukrainian military forces - in Russia's Kursk region. It then circulations through Ukraine to Slovakia.

In Slovakia, the gas pipeline splits into branches going to the Czech Republic and Austria.

Austria still receives most of its gas through Ukraine, while Russia represent around two-thirds of Hungary's gas imports.

Slovakia takes around 3 bcm from energy huge Gazprom annually, also about two-thirds of its needs.

Czech Republic practically completely cut gas imports from the east in 2015, but has started taking gas from Russia in 2024.

Many other Russian gas paths to Europe are shut consisting of Yamal-Europe through Belarus and Nord Stream under the Baltic.

The only other functional Russian gas pipeline route to Europe is the Blue Stream and TurkStream to Turkey under the Black Sea. Turkey sends out some Russian gas volumes onward to Europe including to Hungary.

WHY DOES THE UKRAINIAN PATH STILL WORK?

While remaining Russian gas transit volumes are little, the problem stays an issue for the EU. Numerous EU members such as France and Germany have actually said they would not purchase Russian gas any longer however the position of Slovakia, Hungary and Austria, which have closer ties to Moscow, challenges the EU typical approach.

The countries, who still get Russian gas, argue it is the most financial fuel and likewise blame neighbouring EU nations for enforcing high transit costs for alternative materials.

Ukraine still earns $0.8-$ 1 billion in transit fees from Russian gas transit. Russia makes over $3 billion on sales by means of Ukraine based upon an average gas price of $200 per 1,000 cubic metres, according to Reuters calculations.

Russia's gas pipeline export monopoly Gazprom plunged to a. net loss of $7 billion in 2023, its first yearly loss considering that. 1999, due to the fact that of the loss EU's gas markets.

Russia has said it would be all set to extend the transit deal. however Kyiv has consistently stated it won't do it.

Another alternative is for Gazprom to supply a few of the gas by means of. another path, for example by means of TurkStream, Bulgaria, Serbia or. Hungary. Nevertheless, capacity via these routes is limited.

The EU and Ukraine have actually likewise asked Azerbaijan to help with. discussions with Russia relating to the gas transit offer, an Azeri. governmental advisor told Reuters, who declined to give even more. details.

(source: Reuters)