Ukraine Denies It’s Ready to Extend Gas Transit Deal With Russia

(Bloomberg) -- Ukraine denied it would be ready to renegotiate a key gas pipeline deal with Russia that expires at the end of this year after Slovakia’s Prime Minister said it was a possibility.

Russian gas continues to flow to the European Union through Ukraine under the current deal. Some nations still rely on this fuel, while most of northwest Europe has replaced flows from Moscow with cargoes of liquefied natural gas. 

“The position of the Ukrainian side is unambiguous: the transit contract expires at the end of the year,” Ukrainian Prime Minister Denys Shmyhal’s press office told Bloomberg News. “We are not going to talk to the Russians and extend the contract.”

The gas deal could become an important negotiating point if the war continues to the end of the year. Europe still receives Russian gas via Ukraine and through Turkey. The region has been successful in replacing lost flows from Nord Stream. While stopping short of sanctions, the EU has been clear that the bloc should seek to reduce its dependence on Moscow for energy. 

Gazprom PJSC declined to comment. 

Ukraine is still a key route even though actual flows on the transit pipeline have been less than 40% of the contracted volume since May 2022 after Moscow launched a full-scale invasion. Ukraine lost control of a key cross-border entry point because of Russian occupying forces in the east of the country.

On Wednesday, Slovakia’s Prime Minister Robert Fico, said shipments could be maintained.

“An agreement arose that the transit of Russian gas through Ukraine will probably continue, which is great news,” Fico said in a video-post on Facebook after his meeting with Ukrainian Prime Minister Denys Shmyhal in Uzhhorod. 

Even without a new deal, there is the possibility that Gazprom maintains supply to willing EU buyers by booking short-term capacity in Ukraine — an option the Russian company can use via capacity auctions, analysts at consultant Energy Aspects Ltd. wrote earlier this month.

Gazprom used such bookings before, for gas supplies to Germany via the Yamal-Europe pipeline crossing Belarus and Poland. But those ended after the invasion of Ukraine prompted mutual sanctions between Moscow and Warsaw. 

(Rewrites throughout.)

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