Gazprom has vowed to entirely cut out Ukraine as a transit hub for natural gas exports to Europe.
The conflict with Ukraine has scrambled the longstanding energy relationship between Russia and Europe. The European Union imports around one-third of its natural gas from Russia, but having seen those flows cut off multiple times in the past, European officials are pushing to rid themselves of their dependence on Moscow. The violence in Ukraine solidified that motivation.
Russia is also unhappy with the arrangement. In an effort to separate gas exports to the EU (a critical business relationship that Moscow doesn’t want interrupted) from its ongoing conflict with Kiev (a geostrategic priority), Russia has a great incentive to cut out Ukraine. About half of Russia’s gas exports to Europe must travel through Ukraine.
But that could change within the next four years, if Gazprom gets its way. ‘We will not export gas via Ukraine after 2019. The customers will get gas at (newly) agreed delivery points,’ Gazprom’s Deputy CEO Alexander Medvedev said on June 9.
However, that would require major investments in new infrastructure in order to successfully work around Ukraine. Medvedev is pressing Europe to hurry up and decide on how and where future Russian gas will enter Europe.
This post was published at Zero Hedge on 06/11/2015.
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