Gazprom of Russia Announces Sudden Cancellation of Gas Contracts with Ukraine

A few days after the statements of Vladimir Putin, the President of Russia, regarding the continuation of Russian gas transit through Ukraine, Gazprom announced unexpectedly that it is canceling all gas contracts with Ukraine. The Ukrainian government has ordered the closure of schools and universities to prevent an energy crisis and loss of life. Mr. Putin stated last Thursday during a meeting with Sebastian Kurz, the Chancellor of Austria, that the Nord Stream 2 pipeline project, which is expected to deliver 55 billion cubic meters of Russian gas directly to Germany annually, is not a competitor to Russian gas exports to Europe through Ukraine. Two days after this announcement, the state-owned Gazprom, which holds the monopoly on Russian gas exports, declared that it is canceling all gas contracts with Ukraine. Russia, which supplies one-third of Europe's gas, had conducted half of its exports to the EU through Ukraine last year, but statistics from the past two months show a significant decrease in gas transit from Ukraine to Europe. Gazprom announced on its official website that it does not accept the recent decision of the International Court regarding the payment of $2.5 billion in damages by this company to Ukraine, as well as the reduction in price and volume of gas exports to Ukraine. This is while Gazprom had previously accepted the court's decision and was supposed to start annual exports of four billion cubic meters of gas to Ukraine from the beginning of March, last Thursday. Ukraine had stopped importing gas from Russia three years ago but was indirectly importing Russian gas from its neighboring countries. The Ukrainian oil and gas company reported on its official website that it had even transferred the payment for the gas, but on Thursday, Russia not only did not supply gas to this country but also returned the payment without any explanation. Before the internal crisis that led to the flight of Viktor Yanukovych, the former president of Ukraine, to Russia, a contract was signed for the import of 41 billion cubic meters of gas and the transit of Russian gas to Europe. Moscow is accused of fueling the political crisis in Ukraine by supporting separatists and has faced a series of sanctions from Europe and the US for annexing Crimea in 2014. Gazprom's sudden decision to halt gas exports and transit through Ukraine comes at a time when a large part of Europe, especially Ukraine itself, is experiencing unprecedented cold, and according to a report from Friday by the French news agency, the human toll of the recent cold in Europe has reached 60, with 23 of them having died in Poland, which has severe gas disputes with Russia. This is not the first time that Russia has caused problems for Europe by suddenly canceling gas exports to Ukraine and transit through this country in winter. The country had previously caused trouble for Europe with several days of gas cuts in 2006, 2008, and 2009. In recent years, the European Union has built many pipelines and LNG receiving terminals to secure its energy supply and imports gas from various countries, but it is still significantly dependent on Russian gas. Russia, for its part, is completing new pipelines to increase gas exports to Europe. The country plans to complete the TurkStream pipeline, with an annual capacity of 31 billion cubic meters passing through Turkey, and the Nord Stream 2 pipeline for gas exports to Europe by the end of next year. With the completion of these projects, there will practically be no need for gas exports through Ukraine. Last year, apart from the Ukrainian route, Russia also exported gas to Europe through Belarus and the Nord Stream 1 pipelines.