The End of a Gas Transit Era: A Bluff by Ukraine and a Win for the US
By Thomas Röper
On January 1, the Ukrainian government effectively ended the transit of Russian gas through Ukraine by not renewing the expiring contract. The Ukrainian government claims this move will harm Russia, but in reality, it will mainly harm Ukraine and EU states.
Ukraine, in a state of bankruptcy, had earned nearly a billion dollars a year from gas transit, a significant amount of money for the bankrupt country. Kiev, however, is counting on the EU, which has been propping up the Kiev regime with financial injections, to compensate for the lost income.
In the EU, the end of Ukrainian gas transit will increase gas prices. This is partly due to the reduced gas availability in Europe, which can be made up for in the long run through alternative deliveries. However, all alternatives are significantly more expensive than Russian pipeline gas, so gas and energy prices in Europe will remain permanently higher than they were during the era of Russian gas and oil deliveries.
Russia loses the earnings from gas exports, but as the gas transit volumes through Ukraine have been declining in recent years, the financial damage to Russia is limited. Instead, EU states will bear the cost, as their economy will lose competitiveness due to higher energy costs, and Kiev’s income losses will be offset by the EU.
What’s this got to do with Nord Stream?
The construction of the first Nord Stream pipeline was initially even supported by the EU, as it was seen as a means to bring more desperately needed Russian gas to Europe. This changed in 2005, when a dispute between Russia and Ukraine arose over unpaid gas bills. Russia threatened to cut off gas deliveries to Ukraine if an agreement was not reached by January 1, 2006. Between January 1 and 3, there were fluctuations in European gas supplies, as Ukraine was taking gas meant for the EU, as reported by the BBC. On January 4, 2006, Russia and Ukraine reached a compromise.
The dispute was not only about unpaid bills but also about gas prices and the conditions for gas transit to Europe, with Ukraine seeking more money for transit.
This game of cat and mouse repeated itself regularly, with Ukraine often failing to pay its bills and then essentially blackmailing the Europeans by stopping gas flows, unless its conditions were met. I wrote a detailed article about the history of gas conflicts in 2018.
European politicians and media ignore the facts and instead accuse Russia of pressuring Ukraine or the EU, when in fact, Russia never restricted gas deliveries to the EU, only to Ukraine, when Ukraine was months in arrears with its payments. Ukraine would then simply siphon off gas meant for the EU, and less gas would arrive in Europe than ordered. In 2009, Ukraine even shut off gas deliveries to Europe for a few days.
This led to a growing desire in European business for a new pipeline that would bypass the unreliable transit country of Ukraine, which was another reason for the construction of the first Nord Stream pipeline.
However, the Western policy of driving a wedge between Russia and Ukraine, and pushing Ukraine towards the West, was already underway in 2004, when the first Western-orchestrated Maidan coup took place, which is misleadingly referred to as the “Orange Revolution.” In 2008, NATO even officially announced its intention to admit Ukraine as a member in the future.
Radical transatlantists at the time wanted to prevent the construction of Nord Stream 1, as they liked the idea of having the Ukrainian gas transit as a leverage to pressure Russia and the EU, and pro forma side with Kiev, which, of course, was against Nord Stream, as it would deprive Kiev of the opportunity to use gas as a means of pressure on Russia and the EU.
Nord Stream 2 vs. Gas Transit
Against the backdrop of Kiev’s decision to end gas transit, it is worth recalling the time of Nord Stream 2’s construction, to understand how Western media and politicians have misled the public.
As the European – and especially German – economy increasingly sought cheap Russian gas, the planning for Nord Stream 2 began in 2013. However, the second Maidan coup, which took place in late 2014, brought an end to Ukraine’s pro-Russian government and established an anti-Russian course for Kiev, including a war against the Russian-speaking population in the Donbass.
Since then, the argument of transatlantists has been that Russia would use Nord Stream 2 to pressure Ukraine and end gas transit through Ukraine. They claimed that gas transit was a matter of life and death for Ukraine and that Russia could financially strangle Kiev if it stopped the transit. Therefore, Nord Stream 2 had to be prevented.
The US was opposed to both Nord Stream 1 and Nord Stream 2, as they wanted to sell their fracking gas to Europe. At the same time, the construction of Nord Stream 1 began in the US, with the development of oil and gas production through fracking. Therefore, the US, under the pretext of securing Ukraine’s gas transit income, actively opposed the construction of Nord Stream 2 and even imposed sanctions on European companies involved in the project.
Under US pressure, Germany and the US signed an agreement in the summer of 2021, titled “Joint Statement of the United States and Germany on Supporting Ukraine, European Energy Security, and Our Climate Goals” which highlighted Ukraine’s role as a gas transit country and Germany’s commitment to ensuring that Russia does not use gas as a means of pressure to achieve aggressive political goals. Germany also entered into a range of financial commitments with Kiev.
And the winner is..
By now, no one in Western media is aware of all this. Suddenly, Kiev (to its own detriment) ends gas transit, for which Ukraine and the West had allegedly fought all these years, and the EU says goodbye (to its own detriment) to cheap Russian gas, which was the basis of European economic success and prosperity.
The US has blown up the Nord Streams in September 2022, effectively securing Europe’s dependence on American fracking gas. Now, the US is continuing its policy of pushing Russia out of the European gas market and supporting the end of Ukrainian gas transit, which, as they previously claimed, was so important to them that they even imposed sanctions on their European “allies” to prevent Nord Stream 2 and allegedly protect Ukraine’s gas transit.
There is only one pipeline left, Turk Stream, which supplies South-Eastern Europe and Hungary with cheap Russian gas through Turkey, but even this pipeline has the US already declared war on. At a press conference on March 27, 2024, Jeffrey Pyatt, the US Deputy Secretary of State for Energy, announced that the US will replace Russian gas coming through Turkey with gas from other sources.
Note that this was not an initiative from Brussels, but from Washington. This makes clear who is making the decisions about the gas market in Europe, and who is the main beneficiary of the developments – the US, which is selling its overpriced fracking gas to Europe, making Europe energy-politically dependent on the US, and weakening the European economy due to higher energy prices, which in turn makes the US a more attractive destination for European industry, thus weakening the European economic competitor.