Preparing for 2025: Ukraine and Europe's future without Russian gas

Editor's note: Ivan Us, chief consultant of the Center for Foreign Policy Research of the National Institute for Strategic Studies (Ukraine), Ph.D. in Economics. The article expresses the personal opinion of the author and may not coincide with the view of News.Az.

As 2025 approaches, both Europe and Ukraine are facing a major energy challenge: the looming expiration of the contract that allows Russian natural gas to flow through Ukraine's gas pipeline system (GTS). This contract, which has been the backbone of gas supplies from Russia to Europe through Ukraine, is set to expire on January 1, 2025. Ukraine has already hinted that it’s not keen on renewing the deal. While this might make sense politically, the economic implications of such a move are still up for debate.

For years, Ukraine has earned a significant income from the transit of Russian gas, which plays a crucial role in the country’s economy. Although the revenue is far less than what Russia makes from gas exports, it's still important in the broader context of Ukraine's export earnings. Gas transit is one of the key sources of income for Ukraine, and losing it could lead to major economic setbacks.

Moreover, if Ukraine opts not to renew the transit contract, there are serious risks for the gas pipeline system itself. Leaving the system idle could result in not just financial losses but also the degradation of the infrastructure, which would require hefty investments to repair in the future.

One possible solution is to explore using natural gas from Azerbaijan, which could be routed through Ukraine’s pipeline system. However, making this happen would require overcoming several technical and political hurdles.
The first option involves transporting gas from Turkey using special tankers to deliver liquefied natural gas (LNG) to ports around Odessa. These ports already have LNG terminals that could handle the reception and regasification of the gas before sending it through Ukraine's pipeline system. This approach could bolster Ukraine’s energy independence, but it comes with challenges, including the need for significant financial investments and upgrades to the existing infrastructure.

The second option is to transport Azerbaijani gas through Russia. This route could handle larger volumes, which would mean more revenue for Ukraine from the transit fees. However, this option carries significant political risks. Given the strained relations between Russia and Ukraine, there’s a real chance that gas transported through Russia could end up being Russian gas instead. If that happens, Ukraine risks losing control over the source of the gas, which could lead to even more political tension.

To avoid these risks and ensure transparency, it’s crucial to have solid guarantees that the gas flowing through Ukraine to Europe is truly Azerbaijani. These guarantees would be essential not just for Ukrainian authorities and international partners but also for critics who might claim that Russian gas is being disguised as Azerbaijani. Such claims could be fueled by Russia, which has an interest in destabilizing Ukraine and stirring up internal conflicts.

Adding to the uncertainty is the situation around the Sudzha gas metering station, which is currently under Ukrainian control. This limits Russia’s ability to accurately track the amount of gas entering Ukraine. Despite this, Gazprom has stated its intention to continue gas transit, and supplies are still flowing. However, the question remains about what would happen if Ukraine also gained control over the nearby gas compressor station, which regulates the pressure needed to push gas onwards to Europe. If Ukraine takes control, Russia could face new technical and political challenges.

Choosing not to renew the transit contract with Russia could have wide-ranging consequences. For Ukraine, it means finding new sources of income and energy, which will require a lot of effort and investment. For Russia, it could escalate the ongoing energy battle with Europe, which is already trying to reduce its dependence on Russian gas. And for Europe, this scenario raises the risk of energy instability and the urgent need to diversify supply sources.

In the end, the future of Ukraine’s gas pipeline system hinges on a complex mix of factors, including political will, economic sense, technical capabilities, and international support. Addressing this issue will require careful analysis and a balanced approach to avoid negative fallout for everyone involved.

(If you possess specialized knowledge and wish to contribute, please reach out to us at opinions@news.az).

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