Yesterday at seven in the morning Ukraine cut off the transit of Russian gas to the European Union. The Commission is already preparing a plan to completely separate itself from Russian supply, which continues to account for around 40 bcm per year, practically Spain’s consumption for a year and a half, although much less than the 150 bcm it previously assumed.
The new Energy Commissioner, Dan Jorgensen, promised to make this initiative known within the first three months of the Von der Leyen 2.0 commission’s mandate during his commissioner examination before the European Parliament.
Brussels has assured that it is ready to live without Russian gas but the truth is that it continues to maintain 2027 as the indicative date for the definitive closure. However, the former head of Energy, Kadri Simson, warned of the increase in Russian gas imports to Europe during 2024, which has amounted to 6 bcm more via gas pipeline and 2 bcm more of liquefied natural gas.
The biggest fears in the European Union are that a rapid exit of Russian gas will cause a sharp increase in gas prices in world markets that will once again plunge us into a new energy crisis.
Over the last few months, Russia had offered a political framework for its gas to continue transiting Ukraine, but the Zelensky Government has completely rejected this option, which will mean a loss of income of around 800 million for the country, but of about 4,000 to 5,000 million for Russia if it cannot find a destination for said gas.
Gazprom and its Ukrainian counterpart Naftogaz yesterday finalized the transit agreement reached with difficulty on December 30, 2019, which means closing the entry spigot to 13.6 bcm of Russian gas to the EU.
The measure mainly affects Slovakia and Austria but also has consequences for Hungary, Italy, the Czech Republic, Poland and Slovenia.
Slovakia receives about 60% of Russian gas through Ukraine. In the case of Austria the amount rises to close to 70% and has increased in the last year.
“The Ukrainian operator GTS has prepared in advance the infrastructure to operate in zero transit mode and ensure reliable gas supply to Ukrainian consumers. The company’s team is ready to work in the new conditions,” said Dmytro Lypa, general director of GTSOU.
The new conditions, according to Lypa, concern ensuring the possibility of gas supply both to Ukraine and through Ukraine to European consumers.
The gas supply in Austria is guaranteed. “We have done our job and we are well prepared for this scenario,” said Energy Minister Leonore Gewessler.
The energy industry and the Austrian Government anticipated the situation and already took measures to guarantee the continuity of supply through other routes and suppliers, according to the minister.
The Community Executive also highlighted that the EU’s energy security has been reinforced in recent years with the deployment of renewables and measures to improve energy efficiency.
Brussels had already communicated that the impact of the end of Russian gas transit through Ukraine in the EU would be limited both in volumes and scope and, specifically, it hopes to supply this supply through four alternative routes from Germany, Italy, Poland and Greece. and Turkey.
The Commission had also commissioned several stress tests from ACER (the European energy regulator) to determine the impact.
LNG more expensive
The measure adopted yesterday, however, will foreseeably mean an increase in the cost of liquefied natural gas (LNG) as well as transport freight, since the affected countries will now have to look for new markets.
The world scenario for Europe is also becoming more complicated and the only one that has clearly put its cards on the table is the United States, which wants Brussels to assume a greater amount of American gas purchases, an extreme that Europe tries to avoid in order to make further progress. quickly in the decarbonization process without being tied to long-term gas contracts.
The US, however, continues with an ambitious program to build liquefaction plants to export gas outside its borders, which has allowed it to go from practically zero in 2015 to being the world’s leading exporter in 2024 with nearly 102 bcm.
Russia, for its part, has made progress in the construction of a new gas pipeline that will serve to strengthen the relations it maintains with China, which will provide greater energy supplies.
Supply cuts in Moldova
The Moldovan region of Transnistria has cut off heating and water supplies in the middle of winter after the Russian gas company Gazprom has interrupted the supply of natural gas through Ukraine as its transit agreements expire.
Tirasteploenergo has reported that the supply has been cut off as of 7:00 a.m. (local time), although health facilities are exempt. Therefore, it has urged citizens to take a series of measures, such as sealing windows and doors.
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