Page 13 - bne IntelliNews monthly magazine December 2024

bne December 2024 Companies & Markets I 13
Hungary gets most of its Russian supply via the TurkStream from Turkey, Slovakia receives all of its deliveries via Ukraine. Ukraine transited 14.3bn cubic metres of Russian gas to Europe in 2023, but Kyiv’s transit deal with Moscow is due to run out at the end of this year and it has repeatedly said it will not seek a renewal.
Unless an alternative arrangement is agreed – whether that involves Azerbaijan assuming responsibility for Ukrainian gas transit as has been suggested, or remaining European gas buyers taking ownership of gas at the Russia-Ukraine border – flows through Ukraine are due to halt almost completely in
a month and a half.
The supply cut-off marks the end of a long era for Austria
of energy reliance on Russia. It was one of the first Western European countries to start buying Russian gas after signing a supply contract with the USSR in 1968.
Gazprom's move follows OMV's decision to deduct from its invoice for current supplies more than €230mn ($243mn) in damages from the Russian supplier for past contract violations. / bne IntelliNews
Will the renewal of the Serbia-Russia gas deal prolong Moscow's energy dominance in Europe?
Fuad Shahbazov in Durham
Serbian Deputy Prime Minister Aleksandr Vulin hinted during the Eastern Economic Forum in Russian Vladivostok in September that Moscow and Belgrade need to solve issues related to the gas supply contract set to expire in 2025. Despite Western sanctions, Russia still plays a crucial role in supplying Serbia with natural gas “on time and based on very good conditions”, the Serbian minister said.
Although the continuing Russian gas supplies to Europe pose a serious dilemma within the region, some EU member countries like Hungary, Slovakia and Austria, as well as non-members like Serbia, do not hesitate to maintain energy partnerships with Moscow.
As such, Belgrade officials are preparing to extend the gas deal with Russia for another year. The original deal was signed in May 2022, shortly after the Russo-Ukraine war erupted. Moscow agreed to sign the deal on favorable condi- tions for Belgrade while cutting off gas supplies to Finland, Poland and Bulgaria.
Europe sought alternative gas suppliers to tackle the energy deficit and hurriedly reduce reliance on Moscow. However, it is not yet clear whether the EU plans to shut off the Russian supply pipeline that crosses its member countries. Russia provides 2bn cubic metres (bcm) of natural gas via the Balkan section of the TurkStream pipeline working at capacity. This dependence on Russian gas could potentially hinder the EU's efforts to reduce its reliance on Moscow and diversify its energy sources.
Unlike some EU member countries, Serbia is highly dependent on Russian gas. The EU has not taken any bold steps to punish or pressure Serbia to avoid the extension of the gas deal with Russia. Nevertheless, in 2023, Serbia agreed to import additional gas volumes from Azerbaijan in an effort to diversify the local market, including the inauguration of a new pipeline link via Bulgaria. This move to diversify its energy sources could poten- tially reduce Serbia's dependence on Russian gas. Since 2024, Azerbaijan began supplying Serbia with 400 bcm of natural gas, with an additional agreement to supply an extra 1mn cubic metres of gas on a daily basis from November 2024 to April 2025.
As Azerbaijan’s gas exports represent less than 15% of Serbia’s domestic gas consumption, Belgrade still considers Russia’s Gazprom the main source of gas supplies. However, this diversification strategy could be a step towards reducing
Serbian President Aleksandar Vucic announcing his country's "very favourable" deal with Gazprom in 2022.
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