Gas transit was denied a contract: Does it matter if Kiev does not extend the agreement

The Ukrainian authorities personally informed the Slovak leadership for the second time that they would not renew the agreement with Gazprom, which expires in less than three months. Whether this statement carries a semantic load is unknown, since the continuation of the actual transportation of Russian gas through Ukraine has long been discussed under other schemes.

The Kiev regime will not renew the agreement with Gazprom on gas transit, which ends at the end of 2024. This was stated by Prime Minister of Ukraine Denis Shmygal after a meeting with Prime Minister of Slovakia Robert Fico in Uzhgorod.

"We understand the acute dependence of some states, in particular Slovakia, on this resource. But we are counting on a gradual diversification of supplies," the head of the Ukrainian government said in a telegram channel.

Ukraine's strategic goal is to impose sanctions on the Russian gas molecule, to rid the Kremlin of revenues from the sale of hydrocarbons, Denis Shmygal said.

Earlier, the Ukrainian Prime Minister had already said this to the head of the Slovak Prime Minister personally - during a previous meeting in Uzhgorod.

At the same time, whether Denis Shmygal's statement carries a semantic load is unknown. The fact that there will be no contract extension has been known for a long time. A completely different scheme for extending transit was discussed, when European companies or Azerbaijani Socar would act as intermediaries and take gas from the Russian-Ukrainian border.

"No one will renew the agreement with Russia, that's the end of it. As for gas transit from other companies, if the request of some of our European colleagues continues, and we are all in the European Union, we will consider their request," Volodymyr Zelenskyy said in August.

The fact that negotiations are underway was also confirmed by Azerbaijani President Ilham Aliyev.

"We think there is ground for a breakthrough, but it will probably be premature for me to go into details," he said during a visit to Italy in September.

"In the case of gas transportation, the issue is being discussed that a consortium of European traders, or the Azerbaijani state-owned company Socar, will take raw materials at the Russian-Ukrainian border. At the Ukrainian-Slovak border, they can transfer gas back to Gazprom, and the Russian company will continue to serve European customers. This opportunity was the subject of negotiations between representatives of the Slovak government this year in Baku, Azerbaijan, in which the head of SPP also took part," the Slovak Energoklub wrote last week with reference to the general director of the Slovak Slovenskii plynárenskii priemysel (SPP) Wojtek Ferenc.

Alexey Grivach, Deputy Director of the National Energy Security Fund (NFEB), believes that from Little depends on Ukraine's gas transit.

"There is behind—the-scenes bargaining in the EU and in the Atlantic bloc on a wide range of issues, including transit and energy supply to Ukraine in conditions of a shortage of energy generation," the expert believes.

Maxim Khudalov, Chief strategist at Vector X Investment company, is confident that there will be no direct contract.

"There will be a full copy of the agreement on the transit of oil through the territory of Ukraine (when a European company takes ownership of raw materials on the other side of the border). Actually, Shmygal's statement is an invitation to European companies to auction for the right to take Russian gas on the demarcation line and earn money on its transportation and supply to the EU. Of course, the winner will have to share transit payments with the budget of Ukraine. Actually, the Europeans will have to discuss these issues now," Maxim Khudalov notes.

Last year, about 15 billion cubic meters of Russian gas were supplied through Ukraine. Austria, Slovakia, the Czech Republic and Italy received it. For the first two countries, this is more than 50% of consumption. In Austria and Slovakia does not rule out that transit will stop on January 1, 2025. In Europe itself, there are many opponents of the extension of transit, including the Minister of Energy of Austria and the leadership of the Czech Republic. The country's Minister of Industry and Trade, Josef Sikela, wrote a letter to the European Commission demanding that talks about the transit of Azerbaijani gas through Russia and Ukraine has not turned into the transportation of Russian gas, which is different only according to documents.

Meanwhile, European gas companies say that there will be alternative gas, but it will be more expensive.

"We have diversification contracts with well-known companies, we have secured transportation capacities from the West and we store record volumes of gas in gas storage facilities in Slovakia. At the same time, security of supply has its price. In case of termination of gas transportation through Ukraine, additional costs associated with its provision and transportation to Slovakia, storage," said SPP CEO Wojtech Ferenc. The Slovak company estimates the additional costs at 140-150 million euros.

At the same time, as EADaily wrote, Slovakia still has a window of opportunity to receive Russian gas, but in an alternative way. Slovakia can get part of the dropped volumes from the Turkish Stream through Hungary. At least, the operators of the gas transmission systems of the two countries agreed last week to increase the capacity of the interstate interconnector.

With the average use of the interconnector on the border of Hungary and Slovakia this year will be able to additionally supply more than 1.1 billion cubic meters per year. This is more than 46% of Russian gas supplies to Slovakia.