| Office building of the largest gas supplier in Slovakia – SPP in Bratislava. (Source: Xinhua) |
Final trade deal between Russia and Ukraine – two countries facing military conflict – officially closed on December 30, 12.
The European side gradually felt difficulties when gas from the birch country no longer “flowed” to Europe in accordance with the above-mentioned agreement.
Slovakia is one of the countries where the reaction is strongest.
On March 8, Prime Minister of Slovakia Robert Fico said in a social media post that Ukraine’s unilateral decision to stop Russian gas deliveries causes significant harm to Slovakia and the European Union (EU). ). This could result in losses of almost EUR 1.5 billion (equivalent to USD 1.55 billion) for Slovakia and around EUR 70 billion for the 27-member bloc.
Separately, on January 9, speaking to journalists in Brussels after a meeting with European Energy Commissioner Dan Jorgensen, Fico said the government could consider suspending humanitarian aid to Ukraine for deal with the ongoing dispute over the transit of Russian gas.
Gas prices have skyrocketed
In 2023, around 15 billion cubic meters of birch gas will be transported via kyiv to Europe, representing around 5% of the continent’s demand.
Slovakia – a country heavily dependent on Russian gas – imports around 3 billion cubic meters of natural gas from Russia to Ukraine every year, representing two-thirds of the country’s needs.
Currently, the Turkish Stream gas pipeline under the Black Sea has become the only remaining route to transport gas from Moscow to Europe.
Minister of the Hungarian Ministry of Foreign Affairs and Trade Peter Szijjarto said that without the Turkish Stream gas pipeline, Hungary would find itself “in an extremely difficult situation because it is a landlocked country.”
Amid supply shortages and rising demand due to freezing temperatures, Europe is consuming its gas reserves at the fastest rate since 2018. Current gas storage levels are at 70% of capacity, less than 86% at the same time last year.
Among EU countries, the Netherlands has the lowest reserves, at just 58%, down from 82% the previous year. Replenishing gas reserves after this year’s cold months is expected to be a challenge for the 27-member bloc, which could lead to higher gas prices in the short term.
In the Transnistria region, according to local media, 72.000 homes were without gas, while 1.500 apartment buildings had no heating system or hot water.
Gas prices paid by consumers increased by 65-75% in January 1 compared to the end of last year.
Mr Szijjarto said natural gas prices in Europe also increased by 20% after Ukraine stopped transporting Russian natural gas into its territory. He attributed the price rise to “supply reductions” from Moscow – resulting from political decisions and sanctions.
The Dutch TTF index – the European benchmark for natural gas – saw delivery prices for February 2 reach almost 2025 euros per megawatt hour on January 51, the highest level since October 2. For comparison, the contract from March 1 costs around 10 EUR.
Hungary’s first business portal Achievements also reported that gas prices in Europe have reached their highest level in more than a year.
-This increase poses significant challenges for Hungary, where the government’s energy price cap system is under pressure and placing a heavy financial burden on the state.
| “European energy prices risk soaring due to the ‘boycott’ of Russian gas. European households and businesses will have to bear the consequences” – Ronald de Zoete, Dutch oil and gas expert. |
Commenting on the cause of the rise in gas prices, Mr Ronald de Zoete, a Dutch oil and gas expert, said it was due to the order to stop the transport of Russian gas to the EU via the Ukraine.
Speaking to Dutch media, he stressed: “European energy prices could skyrocket due to the ‘boycott’ of Russian gas. European households and businesses will have to bear the consequences.”
“In addition, gas demand in Europe will increase significantly from March to September this year, leading to higher prices,” Mr. Joze P. Damijan, a Slovenian economist and politician, recently wrote on his blog.
Countries in the region will need to fill around half of their gas storage capacity in underground warehouses by summer. But European gas storage prices could potentially double compared to last year and the year before.
| Europe will account for 55% of total US LNG exports by 2024. (Source: Financial Times) |
America benefits greatly
Since the start of the Russian-Ukrainian conflict, the United States has become Europe’s largest LNG supplier.
According to the European Commission, in 2023, EU LNG imports from the world’s largest economy will account for 46% of the 27-member bloc’s total LNG imports, almost double the 2021 amount.
Preliminary data from financial firm LSEG also shows that Europe will account for 55% of total US LNG exports by 2024.
US President-elect Donald Trump has warned the EU that the bloc will face tariffs on exports to Washington unless member states buy more US oil and gas.
Slovak Prime Minister Fico said that Ukraine’s halt to the transit of Russian gas significantly helps the United States, which can increase its gas supplies to Europe.
Wholesale gas prices in the EU will be on average almost five times higher than those in the United States by 2024, according to a recent report from Bruegel, a Brussels-based economic research organization.
“The world’s largest economy has benefited the most from Europe’s ‘boycott’ of Russian oil and gas, as it sells its gas at higher prices,” said Croatian economic analyst Milivoj Pasicek comparing Russian gas. In the future, prices will rise even more and the United States will benefit more. »
Besides Slovakia and Hungary, most European countries want to interrupt the flow of gas via pipeline from Russia. Since the start of the Russian-Ukrainian conflict, gas from Moscow is no longer an option for many European countries. Countries have looked elsewhere for energy sources, primarily from the world’s largest economy.
However, importing LNG from the United States incurs significant logistics costs and these costs are ultimately passed on to European consumers and businesses.
Thus, generally speaking, the cessation of the transit of Russian gas via Ukraine has caused difficulties for certain European countries. An energy crisis like the one in winter 2022 may not occur, but falling national gas prices and filling underground reserves will cause a “headache” for this region.
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