European consumers could face significant increases in gas prices if the current Russian gas transit agreement through Ukraine is not renewed after its expiration on December 31.
Dmitry Peskov, spokesperson for Russian President Vladimir Putin, issued this warning on Wednesday, as reported by the state-run TASS news agency.
Peskov underscored that Ukraine’s decision not to extend the contract would directly impact European consumers, potentially causing a sharp rise in gas prices.
He also pointed out that such an increase could reduce the competitiveness of European industries, which rely heavily on Russian gas supplies.
The contract in question governs the flow of gas through the Urengoy-Pomary-Uzhhorod pipeline, a Soviet-era system that transports natural gas from Western Siberia to Sudzha in Russia’s Kursk Oblast.
From there, the gas is pumped through Ukraine to Slovakia, where it diverges into two routes—one leading to the Czech Republic and the other to Austria. Hungary, Slovakia, and Austria are the primary customers of this gas.
Ukrainian Stance
Ukrainian officials have consistently stated that they do not intend to renew the transit agreement with Russia.
Ukrainian President Volodymyr Zelensky reaffirmed this position on Tuesday but signaled a willingness to consider discussions if European companies requested an extension.
“Ukraine does not wish to continue the gas transit arrangement with Russia under the current circumstances,” Zelensky said during a press briefing in Kyiv.
However, he added, “We are open to dialogue with European partners and will review any formal requests made by European companies that depend on this supply.”
Ukraine has long criticized its dependency on Russian gas transit revenues, and Kyiv has increasingly sought to diversify its energy sources since the beginning of the conflict with Russia.
Nevertheless, the expiration of the contract without a renewal could leave a significant void in Europe’s energy supply, creating economic uncertainty across the continent.
European Concerns
European countries have become increasingly anxious about the potential disruption to gas supplies, especially as winter approaches.
Countries like Hungary, Slovakia, and Austria, which are heavily dependent on Russian gas, have urged the European Commission to engage in diplomatic efforts to secure a solution before the deadline.
EU Energy Commissioner Kadri Simson acknowledged the concerns, stating, “We are closely monitoring the situation and are in discussions with all stakeholders. Europe needs stable and secure energy supplies, and we are committed to finding a resolution.”
The possibility of increased gas prices is particularly concerning for European industries, which are already grappling with high energy costs. A sudden spike could exacerbate inflationary pressures and slow down economic recovery efforts across the EU.
Broader Implications
The gas transit issue comes amid broader geopolitical tensions between Russia and the West, exacerbated by the ongoing war in Ukraine. Western sanctions on Russia have significantly strained energy relations, and Moscow has used its gas exports as a lever of influence.
Analysts suggest that the expiration of the contract could force European countries to accelerate their efforts to find alternative energy sources, including liquefied natural gas (LNG) imports from the United States and Qatar.
However, shifting away from Russian gas entirely may prove challenging in the short term. Europe still relies on Russian gas for a significant portion of its energy needs, and replacing this supply could take years.
As the December deadline looms, European leaders face a difficult balancing act: securing energy supplies while managing the economic fallout of potential disruptions.