Alan Riley
The State of play
Historically, Ukraine provided the only transit route for Soviet and then Russian gas to European states in what became the European Union. A dense network of pipelines across Ukraine permitted up to 150bcm of Russian gas to be exported westward. This supply system was also underpinned by over 30bcm of storage facilities in western Ukraine. However, post the fall of the USSR, Moscow began developing its pipeline strategy to avoid Ukraine, first with the Yamal-Europe pipeline, then Blue Stream, later with Nord Stream I, Turk Stream I and II pipelines, and finally the Nord Stream 2 pipeline, gas transit flows across Ukraine fell. Nevertheless, even as late as 2004, 137bcm was transited across Ukraine.
Under what now appears to be the final transit contract agreed to run for five years from the end of 2019, the transit agreement for the final four years of the contract provided for just 40bcm annually to be shipped across Ukraine. Gazprom did though agree to pay on ‘ship or pay’ terms. So, even if it did not ship the gas, it was still required to pay the agreed tariff. However, with the onset of the full-scale invasion of Ukraine and the Russian occupation of the Sokhranivka entry point, gas was only transited by the Sudzha entry point (currently under Ukrainian occupation but with the gas still flowing). Hence, since May 2022, only 15bcm of Russian gas has flowed through Ukraine. This gas delivered under long-term supply contracts currently flows principally to Slovakia and the Russian-controlled statelet in Transnistria, with smaller amounts being provided to Hungary and Italy.
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