EconomyEnergyUkraine To Quadruple Gas Transport Fees After Russia Deal Expires

Ukraine To Quadruple Gas Transport Fees After Russia Deal Expires

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Ukraine will quadruple its domestic gas transmission tariffs for consumers from Jan. 1 as it tries to offset the impact of lost revenue after its gas transit deal with Russia came to an end on Monday.

The Ukrainian regulator has approved a decision to increase domestic gas transmission tariffs to about 502 hryvnias ($11.95) for 1,000 cubic meters, up from 124 hryvnias ($2.95) previously.

“In 2024, 85% of our revenue came from transporting gas originating in the Russian Federation. It means that only 15% remains for us from domestic customers,” Dmytro Lyppa, general director of Ukraine’s gas transport operator, said during the meeting to discuss the tariff increase. Ukraine still earns ~$1 billion in transit fees per year from Russian transit.

Previously, Russia said it’s willing to continue supplying gas to Europe via Ukraine if Kyiv and the involved European countries can come to an agreement.

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“Of course, in my opinion, the European countries that currently receive gas through this corridor are interested in continuing such cooperation,” Russian Deputy Prime Minister Alexander Novak, who is in charge of Russia’s energy policy, told reporters “We are ready to supply (gas), but not much depends on us, sos probably this should be negotiated directly between the users and the country through which the transit is provided.”

The EU has warned member countries to prepare for a world without Russian gas, with Ukraine gas amounting to 5% of total EU gas imports. Aura Sabadus, a senior analyst at the ICIS market intelligence firm, told Politico that Austria, Hungary and Slovakia are likely to be the hardest hit when the imports are cut off.

Thankfully, Slovakia has already secured alternative supplies: Azerbaijan’s state oil company, SOCAR, has started supplying natural gas to Slovakia’s Slovenský plynárenský priemysel (SPP), the country’s largest state-owned energy operator. This comes just a month after SPP signed a short-term pilot contract to buy natural gas from Azerbaijan as it prepared for a possible halt to Russian supplies via Ukraine.

By Alex Kimani for Oilprice.com

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