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EU able to receive Russian gas via Ukraine after 2024 through auctions — experts

One of the difficulties with the transition to the auction system is the need to get Russian consent, although direct negotiations appear to be troublesome at present, Alexander Frolov noted

MOSCOW, March 5. /TASS/. The renewal of the contract on Russian gas transit via the territory of Ukraine to Europe after 2024 is of low probability because of the political situation, experts questioned by TASS said.

"The following scenario appears the most probable at present. European buyers will sign a supplement to contracts to formalize the transfer of the gas delivery point to the Russian-Ukrainian border in the vicinity of the Sudzha gas metering station. The operator of the Ukrainian gas transport system will hold auctions, to which European companies will come and book the capacity for Russian gas pumping," Alexander Frolov from InfoTEK said.

One of the difficulties with the transition to the auction system is the need to get Russian consent, although direct negotiations appear to be troublesome at present, the expert added.

Not merely Gazprom but also a European company buying gas from Russia on the border and continuing interaction on its own with the Ukrainian operator later on may act as the gas supplier. However, such pattern requires amendments to gas supply contracts to change the delivery point, which may be "a rather challenging event from the political standpoint" and may hardly take place, Alexey Grivach from the national Energy Security Fund said.

Nevertheless, such a scenario is possible, Frolov noted. "The delivery point where the ownership title passes from Gazprom to a new owner is set in contracts with European buyers. For example, the large gas hub of Baumgarten (Austria) is such one. Accordingly, negotiations should be held to transfer the delivery point to enable European companies to pump their gas over the gas transport system of Ukraine. This does not appear something impossible in current conditions. Negotiations can be held non-publicly and without breaking announcements," he said.

European Commissioner for Energy Kadri Simson said earlier that the European Union is not interested in renewing the agreement with Russia on gas transit via Ukraine. The contract on Russian gas transit via Ukraine expires in late 2024 and provides for pumping 40 bln cubic meters per year.

If the transit of Russian gas via Ukraine is halted, it will be the most difficult to pass through for Slovakia and Austria, Sergey Kaufman from Finam said. These countries may continue importing Russian gas via Ukraine with the use of auctions to book the capacity. Imports via Germany and Italy can be an alternative of Russian gas for Austria.

A suitable formula to continue transit may be found if there is political will and rational approach from the West’s side, Grivach added.

However, the probability of contract renewal is close to zero, considering current political realities, experts say. It cannot be ruled out that transit may be halted either at present or since January 1, 2025, they added.