Transit deal expires with no follow-up agreement on flows to central Europe
A view of the Lakhta Centre, the headquarters of Russia n energy giant Gazprom, in St Petersburg, Russia . Photograph: Anatoly Maltsev/EPAstopped in the early hours of Wednesday after a transit deal between the two countries expired in the wake of Moscow’s full-scale invasion.
“While one would assume that losing those volumes priced in, a strong upward price response initially isn’t out of the question,” said Aldo Spanjer, senior commodities strategist at BNP Paribas.Putin says in new year address that Russia will ‘move forward’ in 2025The deal to allow Russian gas to pass through Ukraine was agreed at the end of 2019, signed a day before the previous 10-year contract between the national gas companies was set to expire.
But it would also be a financial blow to Ukraine, which earned about $1 billion a year in gas transit fees, though only about a fifth of that was gross profits. Analysts have suggested that Ukraine’s vast gas pipeline infrastructure could face increasing Russian attack if there was no Russian gas flowing through it.
Mr Fico said on Facebook shortly before the deal’s expiry that “other gas transit options than Russian gas were presented to Ukrainian partners, but these were also rejected by the Ukrainian president”. The Slovak prime minister has also threatened to cut off back-up electricity supplies from Slovakia to Ukraine as retaliation.
The cut-off of gas will also have a significant impact on neighbouring Moldova, which in mid-December introduced a state of emergency in the energy sector because of the uncertainty around Russian gas transit.
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