MOSCOW (Reuters) – Russia Continues Gas Supply to Europe via Ukraine War Zone

Why?

WHERE DOES THE PIPE GO?

The Soviet-era Urengoy-Pomary-Uzhgorod pipeline channels gas from western Siberia through Sudzha in Russia’s Kursk region into Ukraine towards Slovakia.

In Slovakia, the pipeline splits; one branch leads to the Czech Republic while the other goes to Austria. Key gas consumers include Hungary, Slovakia, and Austria. In 2023, approximately 14.65 billion cubic metres (bcm) were supplied through Sudzha—about half of Russian gas exports to Europe—amid a broader EU gas consumption of 295 bcm.

Sudzha is a focal point in ongoing battles between Ukrainian and Russian forces, with control over the area uncertain. Gazprom’s gas metering point is located nearby the Ukrainian border.

HOW MUCH DOES RUSSIAN SUPPLY TO THE EU?

Before the 2022 Ukraine war, Russia supplied nearly half of the EU’s gas. However, after the conflict, Europe started distancing itself from Russian gas. Additionally, unexplained attacks on the Nord Stream pipeline have led to reduced supplies.

U.S. liquefied natural gas (LNG) imports have increased significantly in the EU market, with U.S. delivery growing from 18.9 bcm in 2021 to 56.2 bcm in 2023. Additionally, Norway’s exports rose from 79.5 bcm to 87.7 bcm. Other suppliers include North African countries, Britain, and Qatar.

The September 2022 Nord Stream blasts, which ruptured three of four lines delivering Russian gas to Europe, remain unclaimed responsibility. Russia blames the U.S. and Britain without providing evidence, while reports suggest Ukraine was involved, though the country denies participation.

In 2022, Russia supplied around 63.8 bcm of gas to Europe, decreasing by 55.6% to 28.3 bcm last year compared to the previous year’s figures. Annual flows to Europe previously peaked between 175 bcm and 180 bcm during 2018-2019.

WHY DOES RUSSIA STILL SEND GAS VIA UKRAINE?

Nearly half of Russia’s natural gas exports to Europe travel through Ukraine, driven by the intertwined interests of finances and history. Gazprom, once a dominant corporate entity, now faces financial struggles, reporting a 629 billion rouble net loss in 2023, its first in over two decades due to shrinking gas trade with Europe.

Ukraine also benefits monetarily from the transit of gas.

WILL THE TRANSIT CONTINUE?

In December 2019, Russia and Ukraine established a five-year agreement for gas transit through Ukraine, allowing 45 bcm in 2020 and 40 bcm annually from 2021-2024. This agreement will lapse in 2024, and Ukraine is unwilling to extend or negotiate a new deal. However, Russia has expressed readiness to continue gas supplies via Ukraine post-2024.

In May 2022, Ukraine halted transit through the Sokhranovka station, transferring all volumes to Sudzha. The only other operational pipeline route to Europe is Turkstream, under the Black Sea.