Russia ready to continue gas supplies to Europe via Ukraine: Novak

Russia is ready to continue to supply gas to Europe via Ukraine, but continued deliveries now depend on an agreement being reached by European buyers and Kyiv, Russia's Deputy Prime Minister Alexander Novak said Nov. 6.

The current five-year Russia-Ukraine gas transit deal expires at the end of 2024 and Russian gas flows to Europe via Ukraine will cease if no new arrangements are put in place.

Novak -- cited by Russian news agency Tass -- said European buyers were clearly interested in continued transit.

"We are ready to supply [gas], though little depends on us here. This is why agreements on that should probably be made directly by consumers and the country ensuring transit," Novak said on the sidelines of an event in Sochi.

"The European countries that currently receive gas via this corridor are obviously interested in further cooperation," he said. "The continuation of this cooperation depends on the agreements that should be reached by European countries and Ukraine."

Main buyers

Despite the ongoing Russia-Ukraine war, some 42 million cu m/d of Russian gas still flows to Europe via the Sudzha interconnection point on the border with Ukraine.

A number of European countries still buy Russian gas delivered via Ukraine, with Austria and Slovakia chief among them.

Austria's OMV and Slovakia's SPP have both said they would be able to meet their supply obligations from other sources should Russian gas flows via Ukraine be suspended from the start of 2025.

But Slovakia in particular has pushed hard for new arrangements to be found to enable Russian gas to continue to flow via Ukraine into Slovakia.

Slovakia also earns revenue as a transit state for Russian gas coming via Ukraine to be sent onward to Austria.

But Ukraine remains opposed to continued Russian gas transit, with Prime Minister Denys Shmyhal saying last month that Kyiv would not extend the transit agreement with Moscow when it expires.

"We understand the acute dependence of some countries, in particular Slovakia, on this resource," Shmyhal said on Oct. 7 "But we are counting on the gradual diversification of supplies."

Price impact

Market concerns over the future of Ukrainian transit have helped make European gas prices for January and February 2025 delivery the most expensive of all future delivery periods along the entire TTF curve out to 2030.

Platts, part of S&P Global Commodity Insights, assessed the January 2025 TTF contract on Nov. 5 at Eur40.67/MWh and the February 2025 contract at Eur40.75/MWh, compared with a day-ahead assessment of Eur40.23/MWh.

Azerbaijan, meanwhile, has been in talks in recent months with Russia and Ukraine over the potential to facilitate continued gas transit via Ukraine.

Azerbaijan's President Ilham Aliyev said Sept. 6 that he remained optimistic about the negotiations and for a breakthrough in the talks.

Ukraine's Naftogaz has also said it has held talks with Azerbaijan's state-owned Socar on the potential transit of gas from Azerbaijan via Ukraine and the storage of Socar gas in Ukraine.

Naftogaz CEO Oleksiy Chernyshov said two scenarios were possible: a complete stop in flows or a model of alternative suppliers and owners to ensure volumes can be delivered to customers in the EU.

Chernyshov also said a "prerequisite" for cooperation would be an offer for Socar to store gas in Ukrainian storage facilities.

Russian gas transit via Ukraine was as high as 117 Bcm in 2008 but fell to just 14.65 Bcm last year.