DixiGroup: Possibility of continuing the transit for another 10 years is rather illusory

Gazprom's strategy will be to renegotiate agreements with European consumers and to completely exclude the Ukrainian gas supply route.

The possibility of extending the transit for another 10 years is rather illusory, although it is enshrined in the Tripartite Protocol. This was written in the blog by DixiGroup Research Director Roman Nitsovych.

“Despite the interest of European consumers, in 2025-2034, Gazprom’s interest in the Ukrainian route will be even lower because of increased competition in the EU. This is fueled by the fact that by 2030 the demand for gas in the EU will be – by most projections – stable or it will go down a bit, whereas by 2050 it will be reduced in view of the high goals for reducing greenhouse gas emissions,” Nitsovych believes.

Thus, after the launch of the Turkish Stream and the completion of Nord Stream 2 construction, Gazprom’s strategy will be to renegotiate agreements with European consumers and completely exclude the Ukrainian gas supply route.

According to Nitsovych, the reality of launching Russian bypass “flows” is evidenced by the minimal volumes of transit recorded in the transit contract.

“For 2020, these volumes are fixed at the level of 65 bcm, that is, the same 89.6 bcm of transit in 2019 minus 15 bcm that went to the Turkish Stream. For 2021-2024, the minimum volumes are 40 bcm, that is, minus 25 bcm – about as much as Nord Stream 2 will take, with 50% capacity utilization,” the expert said.