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Ukraine's gas transit role will diminish or disappear

Friday, June 30, 2017

Subject

Ukraine's receding prospects as a gas route.

Significance

A partial Ukrainian victory in a long-running legal battle against energy giant Gazprom at an international court of arbitration may add to the moral satisfaction of no longer buying gas from Russia. However, the Nord Stream 2 pipeline is coming closer to reality, spelling an end to Russian reliance on the gas transit route through Ukraine.

Impacts

  • Ukraine may renew direct gas purchases from Russia for cold winter periods, if it can secure a separate new deal.
  • The court ruling does not resolve the issue of Ukraine's gas debt accrued before 2014, which Gazprom puts at 2.9 billion dollars.
  • If the pipeline network falls out of use, Ukraine's importance as an EU energy partner will fade.
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