As a reminder, kyiv did not want Russia to continue to sell gas through its territory, this sale allowing Moscow to finance its war effort. However, some European countries, such as Slovakia, have put pressure on Ukraine to sign a new transit agreement. Which was therefore not done.
What impact?
According to the think tank Bruegel, Russia supplied 18% of the gas imported into Europe in the first eight months of 2024. This gas came either by pipelines, via Ukraine and Turkey, or by ships, in the form of liquefied natural gas (LNG).
A little less than a third of Russian gas delivered to Europe passed through Ukraine. Which means that the Ukrainian route supplied around 5% of European gas imports, during the first eight months of 2024.
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According to many experts, Europe is not at risk of running out of gas, despite the loss of this supply route. However, it risks having to pay more to attract LNG ships to its territory. Remember that Asia is in competition with Europe to attract LNG. It is therefore sometimes necessary to increase prices, when LNG becomes more scarce, in order to attract it to your home. This Tuesday, the price of gas briefly reached 50 euros per MWh during the session on the Dutch TTF, the reference futures market for Europe. However, we will have to wait until this Thursday’s opening to see the reaction on the Dutch TTF.
Integrated or not in the price?
Some experts argue that the cessation of Gazprom deliveries via Ukraine was planned and is therefore already incorporated into gas prices. However, a last minute agreement between Ukraine and Russia was not completely ruled out.
In any case, the price of gas, on the Dutch TTF, closed at 48.89 euros per MWh on Tuesday. Such a price had not been reached, at the close, since November 2023. The end of the transit agreement through Ukraine probably played a role. It must also be said that European gas reserves were emptied more quickly at the start of winter than during the two previous winters. Enough to support prices. Let us point out that we are still very far from the peaks reached during the summer of 2022, when Moscow severely tightened the gas valves.
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The United States as savior?
Furthermore, in the longer term, the end of the transit of Russian gas via Ukraine could encourage the United States to invest more in LNG export capacities. As a reminder, American President Joe Biden had frozen the granting of permits in favor of new LNG export projects. His successor, Donald Trump, could therefore issue these permits, once in office, which would relieve Europe.
Finally, some experts argue that Ukrainian energy infrastructure could be even more targeted by Moscow, following the end of the transit agreement. Since Gazprom can no longer sell its gas through the Ukrainian gas network, the Russian army could attack it.
That said, in the longer term, Russia may want to resume exporting gas via Ukraine. And this element could be part of a possible future peace agreement between Moscow and kyiv.
