Gas transit to EU through Ukraine may be reduced nearly by half

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Transit of Russian gas to the EU via Ukraine may be halved if Gazprom ceases supplying gas for transport to Austria, citing a source familiar with the transit operations system.

Why transit might decrease

Last week, Central Europe's largest Austrian company, OMV, reported that another European energy company might stop payments to Gazprom due to a court ruling. If the court's decision is enforced in Austria, it will make payments to Gazprom for gas impossible, according to OMV. Consequently, this would lead to a cessation of supplies.

OMV did not disclose details of the court ruling or the involved company. However, EADaily reports that the case involves Germany's Uniper, which suffered massive losses in 2022.

The losses occurred because Gazprom reduced and then halted gas supplies through Nord Stream 1. As a result, Uniper had to seek alternative gas sources at higher prices. Now, Uniper is seeking €15 billion in compensation from Gazprom through arbitration.

The RBC-Ukraine source also suggested that the court decision likely pertains to Uniper's lawsuit.

Impact of reduced transit on Ukraine

The exact timing of when Russian gas supplies to Austria might stop is unknown, but OMV indicated a high likelihood of such an outcome. Meanwhile, OMV assured that its customers would be provided with resources from alternative sources.

For Ukraine, physical transit will significantly decrease. However, Gazprom must continue paying for transit under the "ship or pay" contract for 40 billion cubic meters per year.

As RBC-Ukraine reported, the European Union sees no need to extend the agreement on the transit of Russian gas to Europe through Ukraine, which expires at the end of 2024.

Nonetheless, some countries are interested in continuing the supply of Russian gas through Ukraine beyond 2024.