European Union nations will meet on Monday to discuss their winter energy plans, following Ukraine’s announcement that it will not renew its five-year gas transit agreement with the EU when it expires on December 31, 2024.
Hungary, in a document shared with energy ministers, highlighted the ongoing challenges of energy affordability, citing volatile prices driven by geopolitical tensions, supply chain disruptions, and dependency on fossil fuel imports. Although natural gas prices have decreased from the pandemic highs, they remain more than double the levels seen before the crisis.
The EU had previously warned member states to prepare for a future without Russian gas. Currently, Ukrainian gas supplies account for 5% of the EU’s total imports. Austria, Hungary, and Slovakia are expected to be the hardest hit by the termination of Ukrainian gas deliveries. However, these countries have been seeking alternative sources to mitigate the impact.
Two weeks ago, Azerbaijan’s state oil company, SOCAR, began supplying natural gas to Slovakia’s largest energy operator, Slovenský plynárenský priemysel (SPP). This followed a short-term pilot contract signed by SPP with Azerbaijan in anticipation of a potential cut-off of Russian gas supplies through Ukraine. Hungary and Bulgaria, meanwhile, have continued receiving Russian gas, having found technical solutions that allow them to pay Gazprom despite EU sanctions on Gazprombank.
Other European nations have also turned to alternative suppliers. For example, major German utilities have secured LNG contracts with the UAE’s ADNOC.
In addition, Turkey has expressed its willingness to significantly increase its natural gas exports to the EU, as it seeks to reduce its reliance on Russian gas. However, this plan faces challenges. To re-export Azerbaijani gas to Europe, Turkey would need to take in more Russian gas to fill the gap. Ankara is eager to enhance its leverage with the EU but is seeking guarantees before committing to the infrastructure investment needed to support this strategy.
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