Kyiv advocates for ceasing oil and gas transport from Russia.

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Cutting Off Russian Gas: What's Really at Stake?

Ukraine has announced plans to stop serving as a conduit for Russian oil and gas bound for the EU by New Year's Eve in 2025. Mychajlo Podoljak, the Presidential advisor, made the revelation to Nowyny.Live. The transit contracts' expiration dates are set for January 1, 2025, with no provisions for unilateral termination. Podoljak remarks, "We'll be putting an end to it all by January 1, 2025."

Ukraine has expressed willingness to facilitate gas transportation from Central Asian or Azeri countries to Europe, with the ultimate goal being to undercut Russia's gas revenue. Despite nearly three years of conflict sparked by Moscow, the gas deal with Gazprom and Naftogaz has been honored, mostly due to pressure from Ukraine's European allies. However, Ukrainian authorities have consistently expressed their reluctance to prolong the arrangement.

Russian oil deliveries through the Druzhba pipeline have been limited to Hungary, the Czech Republic, and Slovakia. The pipeline's northern leg leading to Germany has effectively been mothballed due to Western sanctions. However, a subsidiary of energy provider Eni began pumping oil through the pipeline in August, allowing Russia to generate some transit income, albeit preventing it from selling its oil to the most lucrative European market.

Ukraine's decision to halt oil and gas transport from Russia aims to decrease Russia's energy revenue, but even with a new agreement allowing Eni to use the Druzhba pipeline for oil transportation, Russia misses out on selling its oil to the financially rewarding European market due to the inactivity of the northern leg of the pipeline.

Behind the Scenes:

1. Steers the European Energy Market Towards Diversification:
2. As Europe diminishes its reliance on Russian gas, it's augmenting imports of liquefied natural gas (LNG) from the United States, Qatar, and Norway. This shift is propelled by the need to diversify energy sources and bolster energy security.
3. Amplified Focus on Renewable Energy:
4. Europe has witnessed a steep increase in renewable electricity generation, which has contributed to a substantial reduction in energy-related CO2 emissions. This trend is projected to continue, reducing Europe's overall dependency on fossil fuels.
5. Upscales Energy Infrastructure Flexibility:
6. Europe's gas infrastructure has been bolstered by new LNG import capacities since 2022, offering the continent the flexibility to facilitate gas from non-Russian sources.
7. Strengthens Regional Cooperation and Integration:
8. The European Commission has offered Ukraine a package to safeguard its energy system and integrate it fully into the European energy market. This includes accelerating the coupling of Ukraine's electricity market with the EU by early 2027 and speeding up investments in renewable energy.

The Financial Fallout for Russia:

1. Loses a Significant Revenue Stream:
2. The forfeit of gas transit through Ukraine erases a considerable revenue stream for Russia, with an estimated annual loss of around $6.2 billion.
3. Diminished Influence and Leverage:
4. Ending the gas transit deal chips away at Russia's energy leverage over Europe, reducing its capacity to manipulate European energy policies and diplomacy.
5. Persistent Propaganda and Blackmail Attempts:
6. In response, the Kremlin has continued to sow fear of a global energy crisis, asserting that Russian oil and gas have no viable alternatives. These claims have been dismissed as part of Russia's hybrid warfare strategy.
7. Pursues Alternative Revenue Streams:
8. Despite the financial setbacks, Russia has plans to tap alternative revenue sources, such as the TurkStream pipeline, which delivers gas to Hungary and other countries via the Black Sea.

In conclusion, Ukraine's decision to cease oil and gas transport from Russia poses significant long-term implications for both the European energy market and Russia's financial stability. The shift emphasizes energy diversification, renewable energy, and regional cooperation for Europe, while Russia confronts substantial losses of revenue and decreased influence over European energy policies.