What to expect if Russia halts gas transits through Ukraine

The halting of gas transits to Europe is necessary for Russia, so that it can continue to threaten the EU with “freezing” during the heating season. In the occurrence of such an event, Ukraine has several plans ready in the store.

"Zero" gas transit – this threat could become a reality, the Ukrainian Fokus agency reported following interviews with several experts. Not all consequences that such a stop would call are foreseeable yet, though, seeing as Ukraine has never faced such a challenge before.

“A [gas] transit halt would be bad. Ukraine’s Transmission System Operator [TSOUA] says that they are ready for it, but they have never operated under such conditions. According to the instructions, the equipment should be able to perform, but it is unknown yet how things will work over a long period of time. We have never operated like this. There was only one such instance in January 2009, which lasted for 3 weeks”, an expert from the Institute for Energy Strategies, Yuriy Korolchuk, says.

According to a senior analyst at “Dragon Capital”, Denis Sakvi, the loss of gas transits will lead to the inefficient usage of the TSOUA. “Currently transits allow for its efficient exploitation. In the event of their absence, the system will have to be re-routed from the European border towards the East. It will be essential to redirect the gas streams from the western border to the East and South of the country. The system will have to be adjusted, which will be a less-effective mode that results in increased spending of process gas”. At the same time, he believes that Ukraine has been bracing itself for such an event for a long time and the TSOUA might already be prepared for “zero” transit.

The Director of the analytical centre program DiXi Group, Roman Nitsovich, gave his predictions on how the situation could fold out, explaining that, “the threat is not at all unreal. The Russians could go through with these technological provocations and find a 'legal' justification for a halt of transits. Sanctions by the Russian government are also likely, making it impossible for [Ukraine’s] Naftogaz to have financial transactions with Gazprom. If this occurs, the plan is that the buying party will pay for the transit [service] and not the seller, meaning European companies will reserve our power outputs and pay for the transit costs. The geographical trading point will be located at the Ukrainian-Russian border. In the event of a total halt on Russian gas transits [through Ukraine to Europe], referred to as “zero” transit, the TSOUA will be forced to reverse the directions from the West to the East. Although the risk of several residential areas becoming temporarily disconnected from gas supplies exists, the situation will be, for the most part, manageable”.

The Russian monopolist Gazprom threatened Ukraine earlier in September, saying that Russia will introduce sanctions against Naftogaz if they continue with their attempts of issuing an appeal to the International Court of Arbitration, which would lead to Gazprom’s inability to pay for the gas transportation services. In other words, Gazprom threatened to completely halt transits through TSOUA to Europe. The CEO of Naftogaz, Yuriy Vitrenko, addressed these threats in a Facebook post, accusing Gazprom of “manipulating the facts".

Experts remarked to Fokus that in the case of transit halts during the heating season (November-January), which is likely, a switch to energy-saving mode will have to happen in regards to gas, even though the storage chambers are sufficiently filled for the winter.

In the event of a complete transit halt, Ukrainians will be offered to switch to a mode of the absolute economization of resources. The energy strategist Korolchuk says, “We simply do not have any experience if the transit halt should last over several months. But this will definitely lead to an absolute economization of resources. Nobody knows yet how this will happen. The system has never operated under such conditions. Additionally, the pressure inside the system is low – amidst a total halt of transits, 14,5 billion m³ of stored gas resources are not much”.