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Kiev won’t extend gas transit deal with Moscow – Naftogaz

The agreement that allows for deliveries of Russian gas to the EU through Ukrainian territory expires at the end of 2024

Ukraine does not plan to extend its gas transit agreement with Russia, Aleksey Chernyshov, the head of state-run energy giant Naftogaz, told US state-funded broadcaster Radio Free Europe/Radio Liberty (RFE/RL) on Sunday. The contract between Naftogaz and Russian state energy major Gazprom expires next year.

This agreement will expire by the end of 2024, and we have no intention to extend it. We will not initiate the continuation of this transit. The contract will end – the transit will stop,” Chernyshov stated.

According to the official, Ukraine has grounds to terminate the contract with Russia ahead of schedule, since Gazprom has allegedly paid “no more than 70%” of what it owes for transit. However, Kiev is not scrapping the existing contract immediately because it does not want to leave European consumers without the commodity ahead of winter, Chernyshov said.

The transit contract between Gazprom and Naftogaz was last extended in December 2019. The sides agreed to prolong the deal for the period from 2020 through 2024, with the possibility of extension. After Russia’s Nord Stream pipelines were damaged in an act of sabotage last year, the transit route through Ukraine remains the only avenue for Russian gas to reach western and central Europe. However, Gazprom does still supply gas via the TurkStream and Blue Stream pipelines southern and southeastern Europe.

While Russian pipeline gas flows to the EU dropped sharply over the past year and a half owing to sanctions over Moscow’s military operation in Ukraine and technical challenges, several EU states continue to greatly depend on Russian supplies. In particular, Hungary has repeatedly declared its intention to continue buying Russian gas, which covers most of its needs. Earlier this week, Foreign Minister Peter Szijjarto said Budapest is ready to discuss alternative avenues for Russian gas imports, for instance the prospect of boosting supplies via TurkStream.

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The Turkish Stream pipeline has enormous capacity. Its capacity from Serbia to Hungary is 8.5 billion cubic meters. Thus, in principle… the volume that was secured in our long-term contract [with Gazprom] can also be easily delivered through this pipeline,” he said in an interview with the news agency RIA Novosti. Under the contract with Gazprom, Hungary currently gets 1 bcm of Russian gas through TurkStream and 4.5 bcm via the Ukrainian transit line.

After the sharp drop in Russian gas supplies last year, EU gas prices spiked, triggering inflation and a cost-of-living crisis in many member states. Moscow repeatedly warned that shunning Russian energy exports only harms the EU’s own people and industries. When reports of Ukraine’s intention to scrap the transit contract first surfaced in mid-summer, Russian Deputy Foreign Minister Mikhail Galuzin said the move would “deal a blow” to the EU, while Ukraine would “shoot itself in the foot by losing dividends from transit.”

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