Following the signing of a new transit contract, the likelihood of renewal of Russian gas supplies to Ukraine has increased. This was written in the blog by DixiGroup Research Director Roman Nitsovych.

“The likelihood of renewal of Russian gas supplies to Ukraine has increased. Indeed, there were no and there are no legislative restrictions for this, it is enough to have a contract with Gazprom and to book capacity for entering the GTS of Ukraine,” Nitsovych wrote.

The resumption of gas imports from the Russian Federation may have potential price benefits (if market-based, based on the NCG hub price and a “reasonable discount”), but it will also return the leverage of political influence on the situation in Ukraine to the Kremlin, as it was before 2014.

“As long as there is no liquid and competitive gas market in Ukraine, direct gas sales from the Russian Federation should be restricted or banned or allowed only if the contracts are subject to EU laws and regulations,” Nitsovych added.

We will remind that since January 1, the new TSO of Ukraine has continued the transit of Russian gas in accordance with the five-year contract concluded on December 30, 2019. The continuation of the transit was settled by NJSC Naftogaz of Ukraine, Gas TSO of Ukraine and Gazprom through the whole package of agreements.

The batch solution did not include mandatory direct deliveries of Russian gas, but it did identify the principles by which these deliveries could be made.

“We have excluded this position from the package decision. If they are potentially implemented, they are based on the price of a European hub. This is a principle, but it is not an element of the package,” the Ministry of Energy and Environmental Protection Oleksii Orzhel said.