Russian gas is flooding into European markets at reduced prices, according to the Center for European Policy Analysis, as the Kremlin seeks to win back Western buyers, the think tank said, and potentially undermine support for the continued use of a key shipping route through Ukraine.
Thank you for your registration!
Access your favorite topics on the go with your personalized feed. Download the App
By clicking “Sign Up”, you agree to our Terms of Use and Privacy Policy. You can unsubscribe at any time by visiting your settings page or clicking “unsubscribe” at the bottom of our emails.
The Centre for European Policy Analysis said Russia was pumping discounted gas into the European market, trying to keep countries dependent on its energy supplies.
The think tank explained that this was a strategy to rally support for a key transit agreement between Russia and the West. In six months, a major pipeline contract expires, ending a historic trade corridor through Ukraine, and it will be up to Kyiv to reopen it.
“The stakes are high: Ukraine’s transit decisions will affect not only the country’s long-term security, but also future energy policy across Europe and ultimately the fate of Russia’s gas business itself,” wrote non-resident senior researcher Ola Sabadus.
Russia’s gas industry was thrown into turmoil by the unexpected withdrawal of European buyers after Moscow began its war with Ukraine in 2022. State-run gas giant Gazprom announced its biggest loss in 25 years and, according to internal estimates, won’t be able to recover lost gas sales for at least a decade.
While alternative markets have contributed some to the trade recovery, Russia appears to be trying to win back European customers, CEPA said on Wednesday.
The Ukrainian route has continued to supply Western markets during the war, but when it expires in January it is likely to put Gazprom at risk of bankruptcy.
As a result, gas price cuts of at least 10% have already spread to Central and Eastern European markets, and buyer interest is beginning to grow: countries listed by CEPA as customers for Russian gas include Slovakia, Hungary and Austria.
Sabadus explained that price discounts and the availability of different routes are beneficial for European companies, bringing potentially big profits, which may be enough for Gazprom to regain lost market share.
Already, she suggested, southern European traders are making profits by buying cheap Russian gas transported through Turkish pipelines and selling it at higher prices on Western markets.
“Turkey’s export capacity is currently limited, but Ukraine’s transmission system can transport more than 100 billion cubic meters per year, so buyers certainly see an opportunity to replicate this model on a much larger scale,” Savadas said.
Ukrainian politicians, meanwhile, insist the contract will not be renewed, even as Kyiv’s energy infrastructure is war-ravaged and they are under pressure to do more to deliver gas ahead of winter.
However, CEPA suggested this could also come from suppliers such as Poland.
