Ukraine shuts gas flow: Europe braces for price surge
The agreement for the transit of Russian gas through Ukraine to Europe will expire in a few days. Our eastern neighbours have already announced that they do not intend to extend it. The Kremlin is trying to put on a brave face. The Russian giant Gazprom will lose a few billion dollars annually because of this. At the same time, Putin has decided to threaten Europe with increased gas prices.
In an interview with the Russian news agency TASS, Vladimir Putin stated that gas prices in Europe will increase after Ukraine ends the transit of Russian fuel through its territory, which is expected to happen soon. He recently downplayed the impact of this decision on Russia.
"The transit agreement will no longer exist, that's clear. Ukraine refused to extend it, even though it received 500-600 million pounds annually for it. But that's fine. We will survive, Gazprom will survive," Putin said at the annual press conference summarising the year at the Kremlin.
This concerns the agreement between Ukraine's Naftogaz and Gazprom for the transit of Russian gas through Ukraine to Europe, signed back in 2019. Ukraine decided not to extend it; the transit will end on 1st January 2025.
As we wrote in money.pl, after Poland cut off pipeline supplies (which happened on 31st December 2022, when the so-called Yamal contract, Poland's long-term gas agreement with Gazprom, expired), and the EU imposed restrictions on importing LNG from Russia, it was through Ukraine that Russian gas powered countries such as Slovakia, the Czech Republic, Hungary, Italy, and Austria. And now Kyiv is turning off the tap. As noted recently by "Rzeczpospolita," Gazprom will lose at least 4.4 billion pounds annually because of the Ukrainians' decision.
Not everyone is happy with this decision. It will hit Slovakia hard, which still relies on raw material supplies transported by our eastern neighbours. The Kremlin is also not happy with this turn of events, as evidenced by Vladimir Putin's latest comment.
Putin on "active route" through Poland: nobody hit it
"It's not easy for them there anymore," he said, referring to Europe. "Gas prices have already risen to 380 pounds per thousand cubic metres. Now they will rise again. But it's not us provoking this; it's their policy," he stated.
He also mentioned our country.
Poland closed the route through its territory. There is an active route there; nobody hit it, there was no explosion. It works, just press the button, and the gas will pass through Polish territory. "The route is called Yamal-Europe and it runs right through Poland," Putin said.
Let's recall: from 1996 to 2022, Poland and Russia were linked by the Yamal contract, a long-term agreement between PGNiG and Gazprom for gas deliveries to Poland. It involved about 10 billion cubic metres of gas annually, transported through the Yamal-Europe pipeline. The Polish section of the pipeline is about 683 kilometres long.
The contract terms were renegotiated in 2010. In 2020, PGNiG applied to renegotiate the contract price for gas supplied by Gazprom. PGNiG won arbitration against Gazprom, and in 2022, the Court of Appeal in Stockholm upheld the verdict in this matter. However, in April 2022, Russia stopped gas supplies to Poland as part of the Yamal contract.
