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Exclusive-Gazprom 2025 plan assumes no more transit via Ukraine to Europe, source says
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Exclusive-Gazprom 2025 plan assumes no more transit via Ukraine to Europe, source says
Nov 26, 2024 8:21 AM

MOSCOW (Reuters) - Russian state-controlled gas giant Gazprom is making the assumption that no more gas will flow to Europe via Ukraine after Dec. 31 in its internal planning for 2025, a person familiar with the plans said.

Kyiv has said it wants to end the transit deal, which will bring an end to more than half a century of gas flows from Siberia to the markets of central Europe that began during Soviet times and has been a steady source of Russian budget revenues.

While Ukraine has said it would not consider extending the transit deal, which generates up to $1 billion per year in transit fees for Kyiv, Moscow has signalled it was open for talks and continuation of the flows via the route.

Russian President Vladimir Putin has said that Moscow was ready to continue pumping gas through Ukraine.

Russia, which before the Ukraine war was Europe's number one natural gas supplier, has lost almost all of its European customers as the European Union tries to wean itself off Russian energy and after the Nord Stream pipeline to Germany was blown up in 2022.

According to the person familiar with Gazprom's plans, which are yet to be approved by the top management, Russia's base-case scenario is that there will be no gas transit via Ukraine next year. That person spoke on condition of anonymity due to the sensitivity of the situation.

The source said Russian gas exports to "far abroad" - Gazprom's term for Europe and Turkey, excluding ex-Soviet countries - are expected to fall by a fifth in 2025 to just below 39 billion cubic metres from more than 49 bcm expected this year due to the end of the Ukrainian route.

That covers supplies to Turkey via the TurkStream and Blue Stream pipelines and excludes exports to China, which are expected to reach 38 bcm next year via the Power of Siberia pipeline.

Russian gas exports to Turkey are unlikely to fall.

Gazprom did not reply to a request for comment.

Since the discovery of major Siberian gas deposits after World War Two, Soviet and post-Soviet leaders have spent half a century building up an energy business that linked the Soviet Union, then Russia, with Europe's economies.

War, and explosions, have almost destroyed that link, hurting the economies of both Russia and Europe, which is now much more dependent on U.S. gas supplies.

Russian gas supplies to Europe via Ukraine are already relatively small. Russia shipped about 15 billion cubic metres (bcm) of gas via Ukraine in 2023 - only 8% of peak Russian gas flows to Europe via various routes in 2018-2019.

The Soviet-era Urengoy-Pomary-Uzhgorod pipeline brings gas from Siberia via the town of Sudzha - now under control of Ukrainian military forces - in Russia's Kursk region. It then flows through Ukraine to Slovakia.

About 14.65 billion bcm of gas was supplied via Sudzha in 2023, or about half of Russian natural gas exports to Europe. EU gas consumption fell to 295 bcm in 2023.

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