Russian gas flows via Ukraine totaled 1.26 Bcm in September: AGPU

Russian gas deliveries via Ukraine totaled 1.26 Bcm in September, up by 0.5% year on year, but still only 39% of the contracted transit volume, data published Oct. 9 by Ukrainian gas industry group AGPU showed.

Despite the ongoing war, Russia's Gazprom has continued to send gas to Europe via Ukraine, with volumes delivered at the Sudzha interconnection point on the Russia-Ukraine border at a rate of some 42 million cu m/d for most of 2024.

But transit volumes have remained well below contracted levels this year. "In September, Gazprom pumped 1.26 Bcm, or 39% of the contracted volume. This is 0.5%% more than in 2023 and 2022, but 61% less compared with the same period in 2021," AGPU said.

The total volume of transit for the period January-September amounted to 11.6 Bcm, up 7% year on year, it said.

The five-year gas transit agreement between Russia and Ukraine is due to expire at the end of 2024 and Ukrainian officials have repeatedly said Kyiv would not be party to talks with Moscow on any contract extension.

Ukraine's Prime Minister Denys Shmyhal on Oct. 7 reinforced the country's position regarding Russian gas transit, saying Kyiv would not extend the transit agreement with Moscow.

The comments came after Shmyhal met with his Slovak counterpart Robert Fico, who has been pushing the case for continued transit of Russian gas via Ukraine after the transit deal expires.

Slovakia -- along with Austria -- remains largely dependent on Russian gas imports supplied via Ukraine.

TTF curve

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 Oct. 8 at Eur39.78/MWh and the February 2025 contract at Eur39.92/MWh, compared with a day-ahead assessment of Eur38.05/MWh.

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

The five-year transit agreement signed in December 2019 was under ship-or-pay terms, meaning Gazprom is obliged to pay for transit whether it uses it or not.

Gazprom is contracted to send 110 million cu m/d of Russian gas to Europe via Ukraine in 2024 -- or a total of 40 Bcm -- before the contract expires.

But since May 2022 Gazprom has been flowing less gas than agreed in the contract and paying less than the agreement provides.

State-owned Naftogaz said on Sept. 26 that it earned a total of Hryvnia 20.409 billion ($496 million) from the transit of Russian gas in the first half of 2024.

In its first-half earnings report, Naftogaz said the cost of organizing transit was some Hryvnia 19,192 million -- or $377 million.

That means three quarters of the revenue from Gazprom was used to maintain the transit service.

While Ukraine's gas grid operator GTSOU operates the network, it was Naftogaz that signed the agreement with Gazprom in December 2019 on the organization of transit that set the conditions and transit volumes for the 2020-2024 period.

Exchange sales

Separately, AGPU said some 379 million cu m of gas was sold in September on the Ukraine Energy Exchange at a weighted average price of Hryvnia 14,452/1,000 cu m ($350/1,000 cu m).

The most active participant during the month was Naftogaz, which bought 313 million cu m of gas on the exchange, or 83% of the total.

AGPU said that since the beginning of 2024 market participants had sold 1.379 Bcm of gas on the exchange.

Private producers and traders began selling gas on the Ukrainian Energy Exchange in April 2023 after a fall in consumption and purchases by the industrial sector in the country.