Russian gas flows transiting through Ukraine to Europe continue to proceed normally despite the uncertainties linked to the armed conflict in the Kursk region, near the Ukrainian border. According to the latest data from the Ukrainian operator GTSOU, the nominated volumes for November 11 at the Sudzha connection point are estimated at 42.2 million cubic meters.
Russian gas exports via this route have maintained an average near 42 million cubic meters per day in 2024, although the conflict between Russia and Ukraine persists. This regular supply continues despite a military incursion by Ukraine last August in the Kursk region, a strategic area for gas transit.
Preparing for a Russian Counteroffensive
Recent information, cited by the New York Times and corroborated by American and Ukrainian sources, indicates that Russia and North Korea would mobilize some 50,000 soldiers for a potential counter-offensive in this same Kursk region. This mobilization could jeopardize the flow of gas transiting to Europe, thus increasing the nervousness of European markets.
This fear is reflected in gas prices in Europe, which are once again flirting with their highest levels for 2024. The price of the one-month TTF contract, assessed by Platts, reached 42.06 euros per megawatt-hour on November 8 , against an annual peak of 43.47 euros reached on October 25.
Expiry of the Russian-Ukrainian Transit Contract
Concerns over tensions in the Kursk region add to uncertainties linked to the imminent expiration of the five-year transit contract between Moscow and kyiv, scheduled for the end of 2024. This contract, essential for the transit of Russian gas to the Europe, may not be renewed, according to repeated statements by Ukrainian officials. Ukraine, represented by Naftogaz, reportedly has no intention of extending the current agreement.
At the same time, Azerbaijan could play a role in maintaining a flow of gas through Ukraine, with talks underway to facilitate this transit beyond 2024. However, these discussions remain uncertain, leaving a doubt doubts about the future of Russian gas exports via this route.
Reduction of Transit Volumes
The volume of Russian gas passing through Ukraine has seen a significant decrease in recent years. While in 2008 it still reached 117 billion cubic meters, this figure has dropped to just 14.65 billion in 2023. Gazprom, the Russian gas giant, is contractually committed to sending up to 110 million cubic meters per day in 2024, a total of 40 billion for the year.
However, since May 2022, Gazprom's actual flows to Ukraine have been lower than contractual volumes, due to financial and logistical disputes. At this time, Ukraine invoked force majeure to justify a partial interruption of gas flows at the entrance to Sokhranivka, claiming to have lost operational control of this infrastructure in a conflict zone. In response, Gazprom limited its payments, only paying for services actually rendered despite the “ship-or-pay” provisions of the contract.
Alternative Options and Consequences for the European Market
In the context of persistent tensions and flow limitations, Naftogaz proposed to Gazprom to transfer volumes transiting via Sokhranivka to Sudzha, a solution that Gazprom has so far refused to exploit. Before force majeure, Sokhranivka allowed the delivery of 33 million cubic meters of Russian gas per day to Ukraine.
For Europe, these uncertainties add to the energy challenges of winter. Maintaining gas flows via Sudzha therefore remains a strategic point, while European prices remain high and energy demand increases as the colder months approach.
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