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Turning the Valve: Outlook for Russian Gas Transit Via Ukraine

By December 18, 2024January 16th, 2025Public, Showcase Feed, Insight, Natural Gas & LNG

As the year draws to a close, we still don’t know for sure whether Russian gas will be flowing through Ukraine next year. As things stand now, this supply, nearly 50% of remaining Russian pipeline flows, would get cut, requiring Europe to replace it with more expensive LNG.

We examined the effects of such a scenario back in November, in our Global Commodities public webinar “Turning the Valve: Outlook for Russian Gas Transit Via Ukraine.” The accompanying report, which can be found below, explores the Ukraine transit in context, including some background and likely outcomes, the potential disruptions to the European supply balance and impacts on gas markets, and finally explores the knock-on effects on the global LNG landscape and key economies in the APAC region.

Our findings suggest that by redirected LNG from Asia and drawing down from storage, Europe can absorb the impact in 2025, with North African pipeline supply and additional US LNG underpinning supply stability in future years, though Europe will need to pay to refill its storage next summer.

Upside for Russian LNG into Europe remains limited due to the impact of sanctions and will likely find a market in friendly or neutral economies like China and India, coupled with increasing domestic consumption.

In the last couple of months, there have been a few key developments but nothing definitive, like Austria’s OMV winning its arbitration case against Gazprom, US sanctions on Gazprombank, and a recent joint declaration by key EU firms advocating for the continuation of transit through Ukraine, but uncertainty remains, weighting heavily on gas futures.

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