HomeMediaLatest NewsRussia and Ukraine can switch to auction mechanisms for gas transit from 2025

Russia and Ukraine can switch to auction mechanisms for gas transit from 2025

01 June 2023

Belogoryev Alexey M. Research and Development Director, Director of the Center for Energy strategic analysis and forecasting

Alexey Belogoryev, Research and Development Director of the Institute for Energy and Finance, commented to the TASS news agency on the possibility and consequences of not extending the contract for the Russian gas transit through Ukraine after 2024.

The fact that Ukraine does not intend to renew the gas transit agreement with Russia expiring in 2024 was announced today by the former head of the Austrian oil and gas company OMV Gerhard Reuss, referring to a conversation with the Ukrainian Deputy Minister of Energy. According to him, Ukraine intends to implement the agreement until 2024, but will not renew it.

“Firstly, Gazprom was not going to renew it (transit contract - TASS note), as far as I know. Moreover, this contract was imposed on Russia after 2019 by European politicians, primarily Germany. Gazprom even in 2019, considered as the main option the transition to short-term auctions, short-term booking of capacities, as it did with Yamal-Europe from 2021. Most likely, this option will be used," Alexey Belogoryev said.

He noted that in the event of the Russian gas transit termination through Ukraine, Austria and Slovakia will suffer first of all.

“Ukraine, of course, can completely block Russian transit for political reasons. But it is unlikely to do this, and the point is not even in transit payments, but in the fact that European countries, primarily Slovakia and Austria, will need Russian gas for at least another 2025-2026, so it will be under pressure so that Gazprom remains able to reserve capacities," the expert believes.

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