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27 Jan, 13:59

Europeans expected to face higher energy costs this summer — analyst

Gasan Ramazanov referred to the European Commission's decision to push for an extension of the requirements for mandatory gas reserves in EU countries

MOSCOW, January 27. /TASS/. With the suspension of Russian gas supplies via Ukraine, European consumers are expected to face a notable rise in energy costs this summer, when it will be time to refill gas storage facilities, Gasan Ramazanov, an analyst at the Gaidar Institute, told TASS.

"According to estimates by the International Energy Agency, the suspension of supplies via Ukraine raises the cost of energy resources for end users. Consumers in Europe will experience this increase in prices this summer, during the gas storage replenishment period," he said.

The analyst recalled that as of early January, based on public data, gas storage facilities, which are crucial for ensuring the EU's energy security, were filled to 59% of capacity, which is 15% less than during the same time last year.

He also referred to the European Commission's decision to push for an extension of the requirements for mandatory gas reserves in EU countries. This move could further drive up gas prices on the global market, according to the expert.

He stated that Kiev's decision to terminate Russian gas transit increases Europe's reliance on LNG supplies from alternative sources.

"As part of the European Commission's REPowerEU initiative to phase out Russian fossil fuels by 2030, strategies have been devised, including improving energy efficiency in EU states, increasing LNG imports—primarily from the United States—and expanding the use of renewable energy sources," Ramazanov said.

Four routes

The analyst highlighted that following the termination of Russian gas transit through Ukraine, the EU is exploring four primary routes for gas delivery to Europe.

"The first route involves imports through Germany, which depends on a substantial increase in Germany's ability to bring in LNG and pipeline gas from Norway, the Netherlands, and Belgium. This infrastructure can help supply additional gas to Austria, the Czech Republic, and Slovakia," he explained.

The second route involves Poland, "which could facilitate access to Norwegian-sourced gas and LNG for Central European nations.

"The third route is through Italy to transport gas northward via Austria and on to Slovakia and Slovenia," Ramazanov added.

The fourth is the Trans-Balkan route, transporting gas from Turkey to serve Southern and Central Europe.

"It’s worth mentioning that European gas prices climbed by 4.3%, reaching nearly 51 euros, on the first trading day after Ukraine ceased transiting Russian natural gas to Central Europe," the analyst remarked.

The agreement for Russian gas transit via Ukrainian territory ended on January 1, 2025. It had allowed for the annual transport of 40 billion cubic meters of gas. Ukraine's refusal to extend the agreement left Gazprom without the technical or legal means to continue supplies through this route, leading to a halt in deliveries on the morning of January 1. Russian President Vladimir Putin stated that renewing the agreement days before the New Year was unfeasible. Kiev had also announced plans to cease Russian gas transit.