EU to tackle energy security as Ukraine-Russia transit deal nears end

The European Union is preparing to address energy security concerns as the gas transit agreement between Russia and Ukraine approaches its expiration at the end of December.

EU energy ministers will meet on to discuss strategies for the upcoming winter, with a focus on reducing energy costs and enhancing the competitiveness of EU industries amid the green transition. This is the first meeting under Denmark’s Dan Jørgensen, the new EU Energy Commissioner, Caliber.Az reports per foreign media.

Energy affordability remains a critical issue, exacerbated by geopolitical tensions, supply chain disruptions, and the EU's ongoing reliance on fossil fuel imports. Hungary, which currently holds the rotating presidency of the EU, emphasized these challenges in a document shared with energy ministers ahead of the meeting.

The green transition and the need to strengthen EU industries have gained greater prominence on the political agenda, largely due to the aftermath of the energy crisis triggered by Russia’s invasion of Ukraine, which led to a surge in energy prices in 2022. Ministers will also receive updates on preparations for the coming winter, as the current gas transit agreement between Ukraine and Russia—critical for Russian gas deliveries to Europe—expires on December 31.

Although the expiration of the Ukraine-Russia agreement has already been factored into European gas markets, the EU remains confident that alternative gas supplies can be secured. The EU's executive branch, in an assessment seen by Bloomberg News, has stated that the region will be able to adjust to the end of the transit deal.

Although European energy prices are significantly lower than the peak levels of 2022—thanks to a surge in liquefied natural gas imports that replaced much of the lost Russian supply—they remain elevated, causing ongoing financial strain for both households and businesses. Recently, the continent's benchmark futures reached their highest levels in a year, reflecting a fragile market balance where even minor disruptions cause considerable market anxiety.

The EU has maintained that countries still importing Russian gas via the Ukrainian route, notably Austria and Slovakia, could manage without it. The European Commission has indicated it will not engage in negotiations to maintain the gas flow. However, gas buyers in Slovakia and Hungary are reportedly pursuing talks to maintain supplies after the agreement expires, proposing a swap deal between Azerbaijan and Russia.

With a new European Commission beginning its five-year term, the EU plans to introduce a Competitiveness Compass initiative on January 15. This policy document will outline strategies for bolstering EU security and reducing dependency on external energy sources, building on a report released in September by former European Central Bank President Mario Draghi.

In the following months, the EU will unveil a Clean Industrial Deal on February 26, which will offer a comprehensive strategy to maintain industrial competitiveness while ensuring affordable energy. The Commission will also release a roadmap to phase out Russian fossil fuels, which still account for around 15 per cent of EU imports.

By Vafa Guliyeva