Under the offer, Ukraine would be able to receive raw materials from Azerbaijan, which would allow Kyiv to continue making money on the supply. Although this option is acceptable to all parties involved, Ukrainians seem to reject the proposal against all rational ideas, reports mk.ru.
The plan, reported by several international newspapers, would see European companies buy gas from Azerbaijan and pump it through Russian pipelines to their storage facilities, up to the point where they connect to the Ukrainian transmission system. The proposal is important from three points of view:
- Europe would once again have easy access to the critical raw material,
- Ukraine would be able to invoice rent and thus earn income,
- And Russia would become a hub that would not be subject to sanctions.
Ukraine has been threatening this for a long time
According to market rumors, the negotiation process on the issue has already started, however, the final decision is still far away, as neither Kyiv nor Baku have developed specific conditions for such a complex mechanism. By the way, the current Ukrainian statements can also be part of the deal in order to put them in a better negotiating position, thereby achieving a higher transit fee for deliveries.
In addition, the Ukrainian authorities continue to insist that under no circumstances will they deliver raw materials from Russia. Herman Halushchenko, the Minister of Energy of Ukraine, stated that any contract regarding raw materials between his country and Russia is impossible, and the gas connection between the two countries will end at the end of the year.
The contract signed in 2019 is the last Russian-Ukrainian gas agreement officially accepted by both parties. Representatives of the European Union also took part in the development of the current proposal, since Moscow and Kiev managed to reconcile their previously accumulated disagreements only with the participation of an independent mediator.
The previous agreement determined the amount of energy carriers transported to Europe through Ukrainian pipes for five years: 65 billion cubic meters in the first year, and 40 billion cubic meters annually thereafter. The contract was actually performed in its entirety only once.
In 2020, Gazprom pumped around 85 percent of the committed capacity through the Ukrainian gas transmission system, GTS, which was explained by the coronavirus epidemic and the decrease in demand. Then in 2022, the Russian-Ukrainian war broke out, which completely redrawn the markets. Thus, in 2022, only 19 billion cubic meters of Russian gas reached Europe via Ukraine, only 14 billion cubic meters so far this year, and when the agreement expires, deliveries will probably not exceed previous values.
Crude oil is a bigger issue for us
In January, communication intensified regarding the fact that Ukraine will not extend its gas supply contracts with Russia at the end of the year. And we have previously analyzed several times that such a decision would primarily not harm Hungary.
The natural gas included in the Gazprom-MVM contract could enter the country at two border points:
- or on the Turkish Stream (Kiskundorozsma border crossing),
- or at Mosonmagyaróvár.
As we have already written before, in the case of Hungary, there is no obstacle for the entire volume of the Hungarian-Russian long-term gas contract, 4.5 billion cubic meters per year, to arrive via the Turkish Stream. After all, the incoming natural gas has been continuously diverted to the south.
At the same time, the formula is not so simple in relation to Ukraine’s use of sanctions to obstruct the flow of traffic from Russia through the country petroleumso Hungary, Slovakia and the Czech Republic may also be in trouble if they cannot find an alternative solution to Russian dependence.
Kiev imposed sanctions last month to block crude sold by Lukoil, Moscow’s largest private oil company, through pipelines to Central Europe – partially nullifying its immunity from European Union sanctions, which was created to give countries dependent on Russia more time to stop deliveries.
Minister of Foreign Affairs and Trade Péter Szijjártó said on Friday that Ukraine’s action could threaten Hungary’s long-term energy security, and he lashed out at Kiev for the move. According to the minister, Hungary’s crude oil supply is currently secured with temporary solutions.
Ukraine aims to strangle one of the most important sources of income for the Kremlin’s war coffers more than two years after the country was completely overrun. The move may raise supply issues, as Hungary receives 70 percent of its oil imports from Russia – and half of that from Lukoil.
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2024-07-21 21:03:30