MOSCOW, August 28. /TASS/. Europe needs Kiev to transit Russian gas through Ukrainian territory and is expected to maintain efforts to preserve this route, otherwise it will face a spike in gas prices, experts interviewed by TASS said.

"The European market has a strong interest in these volumes. For now, the transit continues unabated. This suggests that diplomatically and commercially the Europeans value this greatly, and this is supported by the facts. Since the Russian side cannot force Ukraine to continue transit, it’s up to the Europeans. They are pushing for this and will take the lead in continuing transit," Deputy Head of the National Energy Security Fund, a Valdai Club expert Alexey Grivach said. The expert noted that the countries that are the most dependent on Russian gas are Austria, Slovakia, Italy and the Czech Republic.

Ukrainian President Vladimir Zelensky said on Tuesday that Kiev would not extend its agreement with Gazprom to transit Russian gas through Ukraine after it expires at the end of the year. Ukraine will make a decision about the transit of Russian gas through its territory to Europe jointly with the EU, the president noted. Experts polled by TASS also said earlier that extending the transit agreement was hardly likely given the political climate. Nevertheless, EU countries could still continue purchasing Russian gas through auctions, booking transit capacity, and shifting the gas delivery points.

A decrease or full suspension of supplies of Russian gas are the most probable scenario, Finam analyst Sergey Kaufman said. Meanwhile, Grivach admits that a European intermediary, a role currently being played by Naftogaz of Ukraine, could purchase capacities for transportation through Ukraine, sell them to Gazprom, take gas from it and give it back to a Russian company on Ukraine’s western border.

Experts are skeptical about the possibility of pumping Azerbaijani gas through Ukrainian territory to the EU after the end of the transit agreement with Gazprom. If Azerbaijan simply becomes an intermediary between Russia and Ukraine, which means that Russian gas on the Ukrainian border would legally become Azerbaijani, such an option is no different from ordinary transit and is unlikely, Kaufman noted. That said, if Gazprom could export gas to Azerbaijan for domestic consumption, while Azerbaijan would increase export to the EU (though not through Ukraine) such a pattern could become part of the Turkish hub with potential supply of only 3-4 bln cubic meters per year, he added.

On August 6, Ukrainian armed forces launched a massive attack on Russia’s Kursk Region where the Sudzha gas metering station is located. The transit line through it remains the only route for Russian gas supplies to Europe via Ukraine. Russian gas supplies have been going through Ukraine in reduced volumes since May 2022 when the Gas Transmission System Operator of Ukraine announced the termination of transit to Europe through the Sokhranovka station due to force majeure: the company allegedly cannot control the Novopskov compressor station in the Lugansk People’s Republic. Meanwhile the Russian gas holding did not see grounds for suspending pumping in the previous form.

Despite the growth of capacities on the market of liquefied natural gas and a near record level of volumes at underground gas storage facilities in Europe, gas prices in the EU may surge above $500 per 1,000 cubic meters amid a cold winter and full suspension of supplies through Ukraine, Kaufman believes.

In the event of suspension or decrease of transit of Russian gas via Ukraine, Europe will inevitably face higher prices on its gas market, Grivach agrees.

Gazprom spokesman Sergey Kupriyanov said earlier that the events in the area of Sudzha in the Kursk Region had resulted in a sharp increase in prices for natural and liquefied gas.