The news that the transit of Russian gas through the territory of Ukraine has been stopped since 2025 has caused heated discussions both in the expert environment and among ordinary people. Now, only a part of the "pipe" in the form of underground gas storage facilities in western Ukraine can integrate into the European gas market.
How will Naftogaz survive the loss of transit, as long as prices are calculated according to import parity, and what is the purpose of the gas hub? These and other issues of the publication Briefly about discussed with analyst Oleksiy Kush.
About the need for a hub
— Oleksiy, you have repeatedly said that the gas pipeline was supposed to be a rational economic project and a national asset, but it became the subject of various speculations, a constant ideological irritant and the "shadow cashier" of reforms at Naftogaz. It seems that now she will never become a national property, has this "train" already left?
— Yes, the real possibility remained at the beginning of the full-scale war, but the ghostly possibility remains until now. It is about the creation of a gas hub in Ukraine on the condition that officials and influential political groups are cut off from the management of this hub. It should be a full-fledged hub integrated into the European gas system, the tasks of which will be not only transit and storage, but also trade at special sites. At the same time, the legal point of entry into the European system should be at the eastern borders. In this case, Ukraine could receive a net profit of about 3-5 billion dollars annually and accumulate it in the reserve fund.
— You said that the legal point of entry into the European system should be moved from the western borders to the eastern. But isn't it more logical for it to be located closer to Europe?
— If we are talking about integration, then the accounting nodes should be precisely on the eastern borders of Ukraine. The fact is that until now gas entered the European system only by crossing the border with Europe. If the legal point of entry into the European system is moved to the eastern borders, then, entering Ukraine, the gas will already legally enter Europe.
About gas prices
— In this form, the gas hub would probably help to get rid of corruption in the distribution system of allegedly "subsidized gas"?
— At least he could minimize it, because the hub would allow for the first time in the history of Ukraine to establish a fair price for gas for the population and TKE enterprises.
For example, in the production of electricity, heat and hot water are actually a by-product. The thermal power plant operating company must take into account how much gas was used to generate electricity (pay for it at a commercial rate) and how much for heat and hot water (pay at a preferential rate). As a rule, this is where fraud occurs, when gas consumption during electricity production is underestimated, and during heat generation, on the contrary, it is overestimated, and as a result, such a company saves millions of hryvnias on the gas tariff. And a single price for gas could eliminate such abuses. Only this should be a fair price, not an indicator set by the Cabinet of Ministers and Naftogaz.
- What is the difference?
- In our country, the price was calculated based on "import parity". This means that a non-existent transit through the territory of Europe, a fee for a "virtual" entrance to our GTS, a non-existent transit through the territory of Ukraine are added to the price, say, at a German or Dutch hub. And the consumer in Poltava paid as much for gas as if it had really been brought from Holland, and not mined nearby. Attempts to switch to "market prices for all" were also unsuccessful.
As a result, despite the fact that all Naftogaz reforms were carried out under the slogan "you give a single price for gas", we went from two prices (for the population/TKE and commerce) to five prices: the population, state employees, TKE, preferential industries and the rest
— What will change after the refusal of transit?
- Rejection of transit for a long time preserves these prices. Only a gas hub could lead to a single price due to the effect of price mixing: cheap Ukrainian-produced gas would be mixed with expensive imported gas. As a result, such a "mixed price" would be available to everyone, it would be cheaper than in Europe, and it would be logical and natural. The gas market is not global, it has local geographical references. Therefore, different prices in different regions of the world are not a violation of market principles.
But as long as there is no hub, there will be no mixing effect.
About how we will live without a "pipe"
— Many are concerned about the question: will Ukraine have enough gas without the "pipe"?
- In fact, the "pipe" has already lost its meaning, and the numbers clearly show this.
In 1992, gas consumption in Ukraine was 110 billion cubic meters per year, transit — 120 billion, industrial consumption — 40 billion. Gas consumption has now fallen to less than 20 billion cubic meters per year, transit to 18 billion, and industrial consumption to about 4 billion. With such parameters of the economy and the utility sector, we need not a "pipe", but a "pipe".
- But we were constantly told that the problem is not with us, but with Europe: we have to continue the transit, because Europe will freeze without us. What has changed?
— First, Europe reduced the consumption of pipeline gas and increased the consumption of LNG (Liquefied natural gas, which does not require pipes for its delivery, can be transported on special sea vessels or special vehicles, which is much more economical. — Ed.). The Turkish direction is the only branch of supply of Russian pipeline gas to the EU market, although it is largely consumed by Turkey and Turkish industry. The fact is that the "green course" of Europe led to the so-called "green self-censorship": long-term contracts became "politically incorrect", Europeans began to refuse them. Pipeline gas is tied to long-term contracts. At the same time, LNG is an exchange commodity that is traded on the spot market, and it can be ordered at any time in the required volumes.
In addition, during a full-scale war, Europe significantly reduced its consumption of Russian gas, from the point of view of risk diversification.
And, after all, from the side of Ukraine, this is a "passport" of the Trump administration. The US wants to increase the share of its LNG in the European market, and it needs guarantees. By stopping the transit, Ukraine actually cleared the space for LNG.
Who won and who lost
- Truba was a reliable source of financial stability for Naftogaz. We all remember the million-dollar awards to the company's management for various merits. And what will happen to the NAC now? Will they find an opportunity to solve the planned financial problems?
- No, they won't find it. Previously, the constant hole in the working capital of Naftogaz, against the background of the drawn profit, was regularly compensated by transit revenues. Transit, one might say, was a financial "lifeline", without which it would be very difficult to justify the payment of those bonuses and bonuses. Now that transit has "fallen off", that opportunity will no longer exist. Raising prices is also not an option: industry is practically destroyed, and the population's solvency is low.
Therefore, the prospects of the NAC are rather vague. I think that "Naftogaz" will be restructured, excess capacity will be disposed of, and "Ukrgazvydobuvannya" will be privatized after the war.
— Let's summarize. Moldova, a number of European countries, and Naftogaz suffered from the suspension of transit. It turns out that only the USA, which got the opportunity to increase the sale of its LNG, remains the winner?
— The United States is really the main geopolitical and economic beneficiary in this situation. But not the only one.
First of all, the countries that will supply LNG to Europe will benefit. And the stereotype that the USA has completely captured this market is not true: Qatar and Norway supply half of the gas to Europe. Prospects are opening up for African countries - Nigeria, Algeria, as well as Azerbaijani natural gas.
— And what is more for Ukraine in such a decision - pluses or minuses?
— If we leave the war aside, the rejection of the transit potential is a huge disadvantage for the country. After abandoning transit, we can create a gas hub based only on underground storage, so that there is an incentive for domestic gas production and investment. Without this, the infrastructure degrades, investors will not want to invest money, and large field development projects can simply be forgotten.
GTS was a huge gift to us after the collapse of the USSR and provided hundreds of millions of dollars a year. It is difficult to find logic in such a decision. We gave up gas transit, but we continue oil transit: the Druzhba oil pipeline operates under a contract until 2030. (By the way, the draft law banning the transit of Russian oil and gas has already been registered in the Verkhovna Rada. — Ed.) But if the Russian Federation receives approximately 6 billion dollars a year in both the first and second cases, then we received about 800 billion dollars for gas transit million, and for the transit of oil - 200 million, that is, four times less.
But, taking into account the factor of war, the refusal of transit has a huge ideological and emotional-psychological significance. And it's like a bulldozer changing all logical conclusions - rational models simply don't work in such conditions.
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