Russia reduces gas flow to Europe via Ukraine as deal expires, EU industries at stake
MOSCOW – Russian energy company Gazprom said it would pump a reduced volume of gas to Europe via Ukraine on Tuesday, the last day before the expiry of a deal that had kept the gas flowing throughout nearly three years of war.
Gazprom said it would send 37.2 million cubic meters on Tuesday compared to 42.4 mcm on Monday.
For Europe, the loss of cheap Russian gas supplies contributed to a major economic slowdown, a spike in inflation, and a worsening of a cost-of-living crisis.
While the EU has been quick to find alternative energy sources, the loss of Russian gas has exacerbated long-term concerns about its declining global competitiveness and, in particular, about Germany’s industrial future.
Russian President Vladimir Putin said on Dec. 26 there was no time left this year to sign a new deal on the transit of gas via Ukraine. Meanwhile, Kyiv has rejected negotiations for a new agreement.
The remaining buyers of Russian gas, such as Slovakia and Austria, have arranged for alternative supplies, and analysts foresee minimal market impact from the Russian gas flow stoppage.
The price at the Title Transfer Facility, a virtual trading point in the Netherlands that is used as a benchmark for European natural gas prices, rose only slightly on Tuesday to 48.85 euros per megawatt hour by late morning.
Most Russian gas routes to Europe are shut, including Yamal-Europe via Belarus and Nord Stream under the Baltic.
The Soviet-era pipeline via Ukraine brings gas from Siberia via the town of Sudzha in Russia’s Kursk region. It then flows through Ukraine to Slovakia. In Slovakia, the gas pipeline splits into branches going to the Czech Republic and Austria.
Ukraine is giving up some $800 million a year in fees from Russia, while Gazprom will lose close to $5 billion in gas sales to Europe via Ukraine.
