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By Vladimir Soldatkin and Dan Peleschuk
MOSCOW/KYIV (Reuters) -Russian gasoline exports by way of Soviet-era pipelines operating by way of Ukraine got here to a halt on New Yr’s Day, marking the tip of many years of Moscow’s dominance over Europe’s vitality markets.
The gasoline had stored flowing regardless of practically three years of warfare, however Russia’s gasoline agency Gazprom (MCX:GAZP) mentioned it had stopped at 0500 GMT after Ukraine refused to resume a transit settlement.
The broadly anticipated stoppage is not going to affect costs for shoppers within the European Union – in contrast to in 2022, when falling provides from Russia despatched costs to file highs, worsened a cost-of-living disaster and hit the bloc’s competitiveness.
The final remaining EU patrons of Russian gasoline by way of Ukraine, equivalent to Slovakia and Austria, have organized different provide, whereas Hungary will maintain receiving Russian gasoline by way of the TurkStream pipeline beneath the Black Sea.
However Transdniestria, a breakaway pro-Russian area of Ukraine’s neighbour Moldova additionally reliant on the transit flows, reduce off heating and scorching water provides to households early on Wednesday. Native vitality firm Tirasteploenergo urged residents to decorate warmly, grasp blankets or thick curtains over home windows and balcony doorways, and use electrical heaters.
Ukrainian President Volodymyr Zelenskiy, writing on the Telegram messaging app, mentioned the tip of gasoline transit by way of his nation to Europe was “one in every of Moscow’s greatest defeats” and urged the U.S. to produce extra gasoline to Europe.
“The extra there’s available on the market from Europe’s actual companions, the sooner we are going to overcome the final unfavourable penalties of European vitality dependence on Russia,” he wrote.
Europe’s “joint process” now, he wrote, was to help ex-Soviet Moldova “on this interval of vitality transformation”.
The European Fee mentioned the EU had ready for the cut-off.
“The European gasoline infrastructure is versatile sufficient to supply gasoline of non-Russian origin,” a spokesperson for the Fee mentioned. “It has been bolstered with vital new LNG (liquefied pure gasoline) import capacities since 2022.”
Russia and the previous Soviet Union spent half a century build up a significant share of the European gasoline market, which at its peak stood at round 35%. However the EU has slashed its dependence on Russian vitality for the reason that begin of the warfare in Ukraine by shopping for extra piped gasoline from Norway and LNG from Qatar and america.
Ukraine, which refused to increase the transit deal, mentioned Europe had already made the choice to desert Russian gasoline.
“We stopped the transit of Russian gasoline. It is a historic occasion. Russia is dropping its markets, it should undergo monetary losses,” Ukraine’s Power Minister German Galushchenko mentioned in a press release.
ALTERNATIVE SUPPLIES
Ukraine will lose as much as $1 billion a yr in transit charges from Russia. To assist offset the affect, it should quadruple gasoline transmission tariffs for home shoppers from Wednesday, which might value the nation’s trade greater than 1.6 billion hryvnias ($38.2 million) a yr.
Gazprom will lose near $5 billion in gasoline gross sales.
The corporate halted provide to Austria’s OMV in mid-November over a contractual dispute however in current weeks Russian gasoline has been reaching Austria by way of Slovakia at a price of round 200 gigawatt hours (GWh) per day. For Jan. 1, solely about 7 GWh per day is anticipated to circulate from Slovakia to Austria, Austrian vitality regulator E-Management mentioned.
Slovakia’s principal gasoline purchaser SPP mentioned it will provide its prospects primarily by way of pipelines from Germany and likewise Hungary, however would face extra transit prices.
Mixed pipeline routes from Russia delivered a file excessive 201 billion cubic metres (bcm) of gasoline to Europe in 2018.
The Nord Stream route throughout the Baltic Sea to Germany was blown up in 2022 and the Yamal-Europe pipeline by way of Belarus has additionally shut.
Russia shipped about 15 bcm of gasoline by way of Ukraine in 2023, down from 65 bcm when the final five-year contract started in 2020.
($1 = 41.9000 hryvnias)
