Shotaro Tani and Alice Hancock of the Financial Times report that Russian gas flows through Ukraine will stop on January 1 as a transit deal expires, impacting Europe’s gas supply, especially in Slovakia. While Russia loses $6.5bn in transit fees, Ukraine also faces economic losses. The EU is confident it can manage with alternative gas routes, though higher LNG costs may result. The halt could further shift Europe away from reliance on Russian gas. They write:
Russian gas flows through Ukraine are set to stop on Wednesday when a transit deal between the two countries expires in the wake of Moscow’s full-scale invasion.
The pipeline was one of the last two routes still carrying Russian gas to Europe nearly three years into the full-scale war. EU countries will lose about 5 per cent of gas imports in the middle of winter.
While traders had long expected flows to stop, the end of the pipeline route through Ukraine will affect Europe’s gas balance at a time when demand for heating is high. Slovakia is the country most affected. […]
The Ukrainian government had telegraphed months in advance that it was unwilling to negotiate an extension to the deal, as it wanted to deprive the Kremlin of its income from gas exports. Ending the flows would result in a $6.5bn loss for Russia, unless it could redirect them, according to the Brussels-based think-tank, Bruegel. […]
While European governments may impose restrictions to prevent the continent from once again becoming over-reliant on Russian gas, the trader said, “you would expect to see some Russian gas back in Europe, because fundamentally, geography has not changed”.
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