Page 43 - bne IntelliNews magazine February 2025

bne February 2025 Eastern Europe I 43
do so for many years to come. Russia’s efforts to clinch a new deal with China for 50bcm of gas per year – twice the pipeline shipments that it had been sending to Europe before the Ukraine cut-off – have so far received a cool response from Beijing.
Ukraine will lose around $800mn in annual transit revenue. Unless flow
is resumed, Kyiv will retire most of
its transit pipelines as they will be
too costly to maintain without any revenue, eating up about $1bn a year in maintence costs. Ukraine's total pipeline capacity stands at over 140bcm – far in excess of what was needed even before the end of the transit deal.
Slovakia has lobbied hardest to avoid
a halt, as it is more dependent on Russian gas through Ukraine than any other EU country, with flow through
the country accounting for about 60% of its gas supplies last year. Slovakian Prime Minister Robert Fico said on December 13 that his government was holding “very intense” negotiations
on continued transit through Ukraine, adding he was “confident that a solution can be found.” He later flew to Moscow to meet with Russian President Vladimir Putin for talks on December 22 without result.
Other affected countries in the EU include Hungary and Austria, although both have access to more alternative supply that Slovakia does not. Hungary can still import Russian gas via the TurkStream, the last remaining Russian pipeline route to Europe, while Austria can access German imported LNG and Norwegian pipeline gas. Slovakia’s options are more limited, although it can also pipe in some gas from Germany and Hungary.
possible to arrange contracts for gas delivery through third parties, noting as examples intermediaries from Turkey, Hungary, Slovakia or Azerbaijan.
"The problem is that Gazprom has long- term contracts, until 2035, until 2049, and in order to change the situation with transit, these contracts need to be dissected," he said. "This is a complex procedure."
What next?
No such contracts have since been announced, which would presumably involve European buyers purchasing Russian gas at the Russia-Ukraine border and then taking responsibility for its transit through Ukrainian territory, limiting the need for direct interaction between Moscow and Kyiv. However, this option would still need Russia and Ukraine first to sign a border interconnection agreement, which is yet to be announced.
Gas flow may well resume, if such arrangements are made. A lot will depend on the outcome of peace talks on Ukraine, in which the actions of the incoming Trump administration will play a critical role. For the time being, Europe’s weak energy security has been made even weaker, and its economy will suffer.
Russia’s Gazprom also announced on December 29 it would be halting gas supply to Moldova, depriving of fuel a key power station in the breakaway region of Transnistria that supplies the bulk of all Moldova’s electricity. The Moldovan government has implemented emergency measures to curb power use and switch to alternative fuels to natural gas.
Despite efforts by Slovakia and others, the writing was on the wall when Putin said on December 26 that it would be impossible to agree a new transit deal before the end of the year.
"There is no contract – and it is impossible to conclude it in three-four days, no way," Putin was quoted as saying by Russia’s TASS news agency. However he said that it might still be
The war went badly for Ukraine in 2024 Ben Aris in Berlin
Ukraine lost more territory to
the advancing Armed Forces of Russia (AFR) in the second half of 2024 than at any time since the initial invasion in 2022.
“Although the worst-case scenarios didn’t materialise in 2024, it was the most difficult period since spring 2022. There were positive developments, and bright spots, but the current trajectory is negative,” says leading military analyst Michael Kofman, a senior fellow specialising in Russian military affairs in a post on social media.
The Armed Forces of Ukraine (AFU) relinquished control of over 3,600 square kilometres of territory in 2024, marking a sharp increase in territorial losses compared to 2023, when around 540 square kilometres were lost.
The most intense fighting is currently in the Donbas region, as the Kremlin largely ignores other operations, hoping for a breakthrough and control over Ukraine’s key frontline logistical centre of Pokrovsk. November alone saw an average AFU daily loss of 20.3 square kilometres.
The Kursk incursion is also going badly, after the AFR recaptured half the territory it lost in August, partly thanks to the help of a reported 12,000 elite North Korean troops that have arrived on the battlefield. On January 5, the AFU launched a large counter offensive in the Russian region to push back the AFR and the Kremlin reportedly has been forced to move some of its own elite troops to the region to shore up defences.
The Russian assault has been extremely expensive in terms of the loss of life,
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