«No benefit for them»
In a situation where the town of Sudzha in the Kursk region has been captured by units of the regular Ukrainian army, a completely reasonable question arises about the fate of Russian gas transit to the EU. Today, the route through the Sudzha gas metering station (GMS) remains Gazprom's only supply channel to European consumers, primarily Austria and Slovenia. Daily pumping volumes amount to 42 million cubic meters of gas, and annual volumes are 15 billion. The fact that the risks of transit being stopped are not groundless is evidenced by the rather sharp — 5.6% — increase in gas prices in Europe.
On Thursday, August 8, in three hours of trading, quotes on the TTF exchange in the Netherlands rose to $433.07 per thousand cubic meters, having risen by 6.5% at once. A direct connection with the events in the Sudzhansky district of the Kursk region, 9 kilometers from the border with Ukraine, suggests itself. What can I say, a sensitive point on the map — both for Russia and Gazprom, and for Europe and the Ukrainian gas transportation system. And I would like to understand: to what extent does official Kyiv need the Sudzha GIS, what is it going to do with it? And what will be the consequences of a potential termination of gas transit to Europe for all three parties involved in the project — the European Union, Ukraine and Russia?
— Gazprom, as its representative stated, continues to supply gas for Europe in transit through Ukraine to the border GIS Sudzha. During the day on August 8, 38 million cubic meters should be pumped, which is slightly less than the usual volume of 42 million, says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation. — This means that the station is still operating, that it is technically sound, and that there is no fundamental decision to stop pumping along this route. Accordingly, it is not so important in whose hands it is now — the main thing is that no changes have occurred with transit.
— Indeed, the price increase is quite significant: the exchange has set the highest price for 2024. I think the markets have decided to play out certain risks associated with the transit stoppage. If this happens in reality, the price will jump even more. Well, the further development of the situation will depend on the news: if Austria and Slovenia start taking gas from underground storage facilities to cover the current deficit, then a really big jump in quotes cannot be avoided. Of course, prices will not reach the level of a couple of thousand dollars per thousand cubic meters, as was the case in 2022, but the $500 and even $600 mark may well be overcome. The situation is important, first of all, for Austria and Slovenia — these two countries are the main consumers of Russian gas supplied to Europe in transit through Ukraine. They will have to look for an alternative on the world market, probably in the form of LNG. And these are additional costs associated, in particular, with the need to deliver gas to the coastal countries of the EU (for example, to Italy), and then pump it through a gas pipeline to their territories.
— From an economic point of view, there is no benefit for it. It will lose money for transit, plus it will have to reconfigure its entire gas transportation system. If transit, which Kiev actively uses for domestic consumption, stops, it will be forced to redirect gas from its underground storage facilities in the west of the country to the central and eastern regions. The Ukrainian GTS has never worked like this before. It is unclear how quickly this can be done, what technical delays may arise. In any case, it will be more expensive, and at a minimum will lead to an increase in tariffs for gas, heating and electricity for ordinary Ukrainian consumers, and at most it will result in supply disruptions and a disruption of the heating season. Since Ukraine has not blocked the route through the Sudzha GIS before, it means it still needs it. I think that by capturing Sudzha, Kyiv had a completely different goal — to occupy Russian territory, to break through to the nuclear power plant in the Kursk region in order to strengthen its rather weak negotiating positions for bargaining with Moscow, to try to return the largest Zaporizhzhya NPP in Europe: six power units of the station would greatly help Ukraine with the current electricity shortage. And the Sudzha GIS as an object does not play a strategic role: if Kyiv wanted to block gas transit, it would have done it earlier on its own territory.