/ world today news/ Will the agreement on the transit of Russian gas through the Ukrainian gas transport system be extended or not? Big question. Slovakia hopes that the document will be continued and awaits the final approval of all details. However, Kiev is categorically against it and refuses to even talk about this topic. What will happen next? Let’s discuss this with our expert Igor Yushkov.
Slovak Prime Minister Robert Fico, after a visit to Transcarpathia, said that after 2024, gas transit through Ukraine may continue, despite the expiration of the agreement. According to him, agreements have already been reached on this issue.
This is great news, which means that we in Slovakia will be able to continue transiting this gas. Not only our businesses will benefit from this, but also Austria and Italy,
– he said, adding that the final decision will be made after all the details are agreed upon.
Kyiv reacted to the Slovak Prime Minister’s statement. The Prime Minister of Ukraine, Denis Shmygal, said that there can be no question of extending the transit agreement.
Recall that at the end of 2019, Gazprom and Naftogaz signed a contract to extend the transit of Russian gas through the Ukrainian gas transport system. The term of the contract is from 2020 to 2024 with the possibility of extension. The document envisages the transit of 65 billion cubic meters of gas in 2020 and 40 billion cubic meters of gas per year from 2021 to 2024. Moreover, the payment for transit is within the reserved capacities, even if in reality the pumping will be – a little.
As for the Russian side, the head of the Ministry of Energy Nikolai Shulginov admitted that some decisions will be made on this situation.
It is obvious that a whole epic awaits us with the continuation or, conversely, the suspension of the transit. The host of “First Russian” Nikita Komarov spoke in more detail about this with the leading analyst of the National Energy Security Fund Igor Yushkov on the air of the program “Tsargrad. Main”.
Who is most interested in transit?
Nikita Komarov: Igor, who do you think is most interested in gas transit through Ukraine?
Igor Yushkov: Above all, continental participants are interested in this. And Russia is interested in making money from gas exports. This was said by the President of the country, Vladimir Putin, during the hotline and at a joint press conference. He said we are still selling this gas and Russia needs money. In addition, there are now large expenditures, including on defense. And Ukraine receives transit benefits for this.
Of course, it as a country earns quite a bit from transit, but many businessmen are interested in preserving it. There, the money does not go directly to the GTS operator, the owner of the gas pipeline, and he transfers his profits not to the budget, but actually to Naftogaz. And they are already distributing part of it in the budget as dividends. In this case, the part is divided among the remaining shareholders.
The Europeans are interested in this little remaining volume. I remind you that about 14.5 billion cubic meters of gas flow through Ukraine. Last year we delivered 14.5 billion cubic meters of gas through Ukraine and the same amount through Turkish Stream.
In 2021, we delivered 160 billion cubic meters. And now there are less than 30 billion cubic meters of gas. That is, the volume is not large, but if there are no deliveries from Russia to Europe, this will provoke a rise in prices. Which the Europeans naturally don’t care about. Because their economy is already close to zero.
— Well, for the industry as a whole, this is a serious downside. And it’s still going on…
– Yes, that’s why they don’t need these problems. All gas passes through Ukraine and continues to flow to Central and Western Europe. These small quantities are split between consumers such as Germany, Italy, Austria, France, the Czech Republic and Slovakia. Of course they don’t want to lose him. Because only the Balkans and, at most, Hungary are fed by Turk Stream. All others – only through Ukraine.
Ukraine blocked one of the gas pipelines
— Do I understand correctly that by transporting gas through Ukraine, Russia (via Gazprom) receives approximately five billion dollars a year? That is, these Ukrainian payments for the transit amount to about one billion.
– Yes Bearing in mind the fact that of this money – one billion that they receive – they still have to spend it on physical pumping of gas, on operation and maintenance of gas compressor stations, etc., and then transfer it to Naftogaz, obviously, the budget includes much less. The numbers you mentioned are what they are contractually supposed to get.
According to the contract, Gazprom pumps 109 million cubic meters per day. And now that Ukraine has blocked one of the two gas pipelines, supplies have dropped by about 60%. As a result, out of one billion, only 400 million remain. Gazprom pays only for actual transmission.
– Why did they block it if they are profiting from it?
– An extremely political moment. They said: if we don’t control some section of the border, then we won’t accept gas further downstream. And the southern branch now passes through the territory of the LPR, after which it enters the territory controlled by Kiev. They blocked it. Although neither the northern nor the southern route is damaged.
However, Ukraine left only the northern one, which passes through our Kursk region. But it is smaller in terms of pumping volumes. It is not 109, as it was written in the contract, but approximately 42 million cubic meters per day. Therefore, they receive not a billion, but about 400 million dollars.
The Ukrainian budget receives not so large sums. Although by Ukrainian standards this is still a good profit. There is a lot to “share” as well. When they say there will be no contract extension, they mean they don’t want to sign an agreement with Gazprom.
And they hint at negotiations with Gazprom to transfer ownership of the gas not to Austria, as is happening now, but on the border of Russia and Ukraine. They say, you pay us, and we will deal with the Europeans later. So that not Gazprom pays for the transit, but the Europeans themselves. They hint at it.
I think Europeans should not take this seriously. Because Ukraine does not solve transit issues. Yes, the US will pressure them not to transit until the end of the year, so that the agreement is not finalized, but closed earlier. If the US continues to blow up our gas pipelines, then naturally they will push Russian gas out of Europe and demand that Ukraine block transit. Maybe sanctions against Gazprom…
— And squeezing out Russian gas is precisely from the point of view of supplying their own LNG, right?
– Yes To clear the market for LNG supplies from the United States. They openly told the Europeans that they had to buy “our American LNG because there are ‘molecules of freedom’ . This was said by the US Deputy Secretary of Energy, Mark Menezes. Therefore, you should buy our American LNG, not Russian gas. Previously, their LNG mainly went to Asia.
When it turned out to be economically impossible to compete with Russian pipeline gas, because in Europe Russian gas was more preferable in terms of price and economic indicators, they threw in political elbows and started pushing us.
The first sanctions against Nord Stream 2 were introduced in December 2019. And when we are now being told that all these sanctions are due to Russia’s position, this is frankly not true. Now they have imposed sanctions on the Russian gas liquefaction project as well and they say it is a blow to the Russian economy as a country.
But this project will not pay taxes in the budget for at least another 12 years, it has preferential treatment. This is exclusively and only pushing out the competitor, and not any measures to influence the Russian budget.
Translation: ES
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