Moscow-Kiev Gas Transit Agreement Fails, Leaving Europe's Supply in Uncertainty

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Moscow-Kiev Gas Transit Agreement Fails, Leaving Europe's Supply in Uncertainty

Investing.com -- According to a source from Azerbaijan's energy company SOCAR, negotiations between Moscow and Kiev have not reached an agreement to extend Russia's gas export contract with Europe through Ukraine. The mediation agreement facilitated by Azerbaijan was expected to end later this year.

The European Union and Ukraine had asked Azerbaijan to mediate talks regarding the gas transit agreement with Russia. However, Russian President Vladimir Putin stated on Thursday that no new agreement will be made with Kiev for transporting Russian gas to Europe via Ukraine.

Since Russia's invasion in February 2022, Ukraine has announced that it will not renew the contract that allows approximately 15 billion cubic meters (bcm) of Russian gas to be transported to Europe. This amount represents a small fraction of the 150 billion bcm of pipeline gas that Ukraine allowed to transit through its territory in 2022.

Ukrainian President Volodymyr Zelensky stated on Thursday that Kiev might consider continuing the transit of Russian gas, but only if Moscow agrees to postpone payment until after the war. This is a condition that Russia is unlikely to accept.

Ukrainian Prime Minister Denys Shmyhal announced to the Interfax-Ukraine news agency that the transit agreement will expire on the morning of January 1. He also added that transit could only resume at the request of the European Commission and only for non-Russian gas.

A source from SOCAR revealed that the company has been mediating negotiations between Ukrainian and Russian energy companies at the request of Ukraine and the European Union for about a year. It was noted that senior executives met with high-level representatives of Ukrainian energy companies in Istanbul on May 2 and in Vienna on August 29. Despite these efforts, the Ukrainian and Russian parties could not reach an agreement on the conditions.

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