“If the deal goes through, Russia will actually continue to supply gas to the EU under the guise of Azerbaijani gas”, — write: www.epravda.com.ua
Russia continues to transport its resources through the Ukrainian GTS, earning from this about 11 billion dollars a year – 6 billion from the transit of oil and another 5 billion from the sale of gas.
At the same time, the European Union is actively working to minimize its dependence on Russian fossil fuels, setting goals in 2022 for a gradual and complete withdrawal from Russian gas by 2027.
Currently, the European Union does not intend to extend the contract for the import of Russian gas, which will expire in 2024, and is actually ready to live without it. As European Commissioner for Energy Kadri Simson reported during the 2024 State of the Energy Union report, the share of Russian gas in European imports decreased from 45% to 15%.
At a recent hearing in the European Parliament on energy security, Maros Šefčovych, European Commissioner for Trade and Economic Security, Inter-Institutional Relations and Transparency, emphasized the EU’s desire to “completely decouple” its energy supplies from Russian gas and oil.
He noted that despite sanctions on Russian oil, the shadow fleet in the Baltic Sea is thriving, and the EU has pledged to do more to cut those supplies and cut off Russian gas and oil entirely.
As for Ukraine, the transit of Russian gas is only 5% of the total gas imports to the EU. This indicator is quite insignificant for Europe, which allows it to do without Ukrainian transit.
If Ukraine decides to stop the transit of Russian gas, it will deprive Russia of about 5 billion dollars of annual income – financial resources that go to support its military actions against Ukraine.
At the same time, the idea of the transit of Azerbaijani gas as an alternative to Russian gas is being discussed. However, this scheme hides another commercial agreement, under which Russian gas will actually continue to be supplied under the guise of Azerbaijani gas.
Some EU member states express the need to ensure the supply of gas through the Ukrainian GTS. For example, the Slovak company SPP officially confirmed the negotiations on the continuation of the transit of Russian gas through Ukraine in 2025. This raises the question: why would a country that consumes only 4 billion cubic meters of gas a year sign contracts for 20 billion cubic meters? Such a solution looks like an attempt to create a new gas scheme.
On October 24, the European Parliament adopted a resolution indicating a change in attitude towards the energy partnership with Azerbaijan. MEPs expressed concern about the political situation in this country, in particular the state of human rights, and called on the EU to reconsider its dependence on Azerbaijani gas. The Parliament asked the European Commission to suspend the Memorandum on Strategic Partnership in Energy, signed with Azerbaijan in 2022.
It is important to remember that there is simply no free volume of gas for transportation in Azerbaijan. If the deal goes through, Russia will actually continue to supply gas under the guise of Azerbaijani gas.
Thus, instead of creating energy independence for Europe, it will only revive the old corruption schemes that were used to achieve the Kremlin’s political ambitions. If Russian gas takes this role again under the guise of Azerbaijani gas, it will only confirm that Europe may once again be under the influence of Russia, albeit in a new form. The real question is how to avoid repeating past mistakes and what mechanisms can be put in place to ensure transparency in this area.
Problems of accounting for the origin of Russian gas in EuropeEuropean energy markets face a serious problem – the lack of clear accounting of the origin of Russian pipeline gas. This makes it difficult to understand the real volumes of supplies from Russia. The current regulations do not provide full transparency regarding the sources of energy resources entering the European markets.
To settle these issues, several directives are in effect in the EU, in particular Remit Directive 1348. It obliges EU countries to provide the regulator ACER with detailed information on sources of energy supply. However, this directive needs to be improved and extended to countries that are not yet members of the Union.
Ensuring control over energy resources at all stages of supply, from their origin to arrival in European countries, will help detect the influence of individual traders, prevent market manipulation and stabilize the EU energy system.
It is worth noting that according to the results of this year, Russian liquefied natural gas (LNG) already covers 20% of the European market. Going back to 2021-2022, when the price of gas in Europe tripled, it becomes clear how this affected the cost of electricity.
A sharp jump in prices occurred due to the fact that traders withheld certain volumes of gas, artificially affecting the market. Today, Europe still lacks full transparency regarding sources of energy supply, not only for gas, but also for other fuel products.
The pricing and supply situation will remain volatile until full information is available on production, origin, transit and storage volumes. Only then will it be possible to assess the risks associated with the activities of large traders and the impact of their actions on the market.
Gas prices will continue to have a significant impact on electricity prices over the next five years, especially in the context of the green energy transition as Europe gradually reduces its dependence on traditional fossil resources. The problem can be solved quite simply: the European Commission can amend the Remit Directive 1348, establishing a requirement for all traders to provide information on the country of origin of gas and other energy carriers. Thanks to such changes, we will be able to distinguish whether there will actually be a transit of Azerbaijani gas or whether it comes from Russia.
Having a complete picture, Europe will be able to conclude long-term contracts with reliable partners. Today, long-term agreements for the supply of LNG and pipeline gas are mainly offered by Russian companies. For example, the Russians conclude contracts for the supply of LNG until 2040, which resonates with Europe’s commitment to gradually abandon Russian gas until 2027.
The positive impact of innovations will not be limited to the analysis of the country of manufacture and sales volumes. Thanks to this, we will be able to understand how much different types of gas, LNG or pipeline, are used for different consumers, such as businesses or citizens.
Therefore, the demand for gas for specific countries, for example, for Slovakia, where there may be a need for 4, 5 or even 20 billion cubic meters, will become completely transparent. Based on these data, Europe will be able to carry out strategic long-term planning, which can also include Ukraine in energy tic region.
The role of gas storagesAs you know, Ukraine has the largest gas reserves in Europe, and these resources can become a key element in ensuring energy security. Given this, the Trans-Balkan and Polish corridors can be effectively used to transport gas to Ukrainian gas storage facilities, which, in turn, will help reduce the impact of possible market manipulation by the Russian Federation.
Gas storages play an important role in the operation of the gas transportation system, as they provide balancing of the network. In case of insufficient gas supply, these storages become a source of additional volumes, which helps to maintain stability both for domestic needs and for transit.
Gas storage facilities are especially important in the winter, so Russia is trying to attack them to prevent the accumulation of sufficient reserves. Despite this, for now these facilities continue to function because they are difficult to destroy even during targeted attacks.
As of 2024, according to calculations consulting company ExPro, more than 12.8 billion cubic meters of gas are accumulated in underground storages of Ukraine, which testifies to the country’s ability to fulfill the role of a reliable gas transporter between European countries. This should become a new strategic goal for Ukraine, which can ensure energy stability not only for itself, but also for other European countries.
Authors: Viktoriya Voytsytska, People’s Deputy of Ukraine of the 8th convocation, director of advocacy in the energy sector of the NGO “International Center for Victory of Ukraine” (ICUV), Olga Babii, member of the National Committee of the Ukrainian National Committee for 2019-2024.