Russian gas transit restart via Ukraine part of Moscow's latest peace memorandum

Moscow included a demand for the resumption of Russian gas deliveries to Europe via Ukraine in a memorandum presented to Kyiv as part of peace talks held June 2 in Istanbul.

In the memorandum, published by state news agency Tass, Russia also called for economic ties with Ukraine to be restored, among other measures, including international recognition of the Russian-occupied regions of Ukraine.

The memorandum called for the "restoration of Russian gas transit through Ukraine and the resumption of full economic, diplomatic and transport ties," Tass reported.

Ukraine halted the transit of Russian gas to Europe on Jan. 1, 2025, after the expiry at the end of 2024 of Ukraine's five-year transit agreement with Moscow.

Ukraine had continued to facilitate the transit of Russian gas to markets in Europe despite Russia's invasion in February 2022.

Some 42 million cu m/d of gas was supplied via the Sudzha interconnection point on Ukraine's border with Russia before the transit halt -- or the equivalent of about 15 Bcm/year.

Ukraine route

Ukraine had been the main route for Russian gas to reach Europe before the startup in 2011 of the Nord Stream pipeline.

Russian gas transit via Ukraine was as high as 117 Bcm in 2008 but fell to just 14.65 Bcm in 2023 before edging back up to 15.5 Bcm in 2024.

Deliveries were, however, well down on those stipulated in the 2019 transit agreement, under which Russia was contracted to send 40 Bcm each year via Ukraine between 2021 and 2024.

The countries most affected by the suspension were Moldova, Slovakia and Austria.

Slovakia has since been the most vocal supporter of a resumption in Russian gas flows via Ukraine, saying the transit halt led to much higher gas prices in European markets.

In the weeks following the transit halt, and amid a relatively cold winter and low storage stocks, the Dutch TTF month-ahead price surged to almost Eur60/MWh in mid-February, according to assessments by Platts, part of S&P Global Energy.

Prices have softened since then, with Platts assessing the TTF month-ahead price at Eur34.96/MWh on June 2.

Russian return

Should there be any return of large-scale volumes of Russian gas into Europe, the Ukraine route seems the most likely.

At present, the TurkStream pipeline via Turkey is the only operational pipeline route into Europe, with others either idled or damaged.

German Chancellor Friedrich Merz said May 28 that the country would do "everything" it could to make sure the Nord Stream 2 gas pipeline did not become operational. Merz is also supportive of sanctions on the pipeline.

The EU is also looking at imposing sanctions to prevent the Nord Stream pipelines from re-entering service.

"The EU is preparing its 18th package of hard-biting sanctions, targeting Russia's energy revenues, including Nord Stream infrastructure," the European Commission said June 2 following a meeting between EC President Ursula von der Leyen and US senator Lindsey Graham in Berlin.

Graham is pushing for a 500% tariff on countries that import Russian oil and gas in a bid to toughen the US stance against Moscow.

In recent months, there has been talk that Nord Stream 2 could be revived -- potentially under new ownership -- with a view to allowing Russian gas to flow via the string of the link unaffected by the sabotage attack against both Nord Stream and Nord Stream 2 in September 2022.

Both strings of Nord Stream were damaged in the attack.

Another potential route is the Yamal-Europe line via Poland, but Warsaw in May 2022 terminated an intergovernmental agreement with Russia that was the legal basis for the transit of Russian gas through the pipeline to Germany.

Flows through the Yamal-Europe line via Belarus had already ended after Russia imposed sanctions on EuroPolGaz -- the owner of the Polish section of the pipeline -- which meant the use of the link was banned for Russian entities.