Ukraine Blackmailing Europe By Refusing To Renew Gas Shipment Deal

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Written by Uriel Araujo, researcher with a focus on international and ethnic conflicts

Russia’s Gazprom has said  it would ship 42.4 million cubic meters of gas to Europe – such a volume is in line with recent days. There are concerns regarding the future of gas shipments to Europe, however. Last month, Ukrainian energy minister Herman Galushchenko ruled out the prospect of Kiev participating in new Russian gas transit talks pertaining to a five year agreement which will expire at the end of 2024. He added that by 2024 Europeans should be ready to manage without Russian gas. This is the latest chapter of a long dispute.

Writing for Politico in September 2022, energy correspondent America Hernandez highlighted that Russian energy giant Gazprom and Ukraine’s Naftogaz were in a battle regarding arbitration and payments for gas shipments through Ukraine – and this threatened gas transit to Europe. Here, some context is needed.

Despite the ongoing confrontation, Gazprom (Russia’s state-owned energy corporation) has been honoring a pre-conflict 2019 transit agreement: the 2019 deal, which runs until the end of 2024, allows Gazprom to export over 40 billion cubic meters of gas a year via Ukraine – and this earns Kiev about $7 billion.

Gazprom chief Alexei Miller, however, warned in July 2023 that the Russian energy giant could stop exporting if Kiev did not cease its campaign to seize Russian state assets. Ukraine has been in fact fighting a legal war to make Moscow pay over $5 billion as compensation for Ukraine’s state energy firm Naftogaz losses pertaining to the annexation of Crimea after the 2014 referendum. Naftogaz’s lawyers have been filing enforcement petitions in several jurisdictions internationally. According to Elena Chachko, a Harvard Law School’s Rappaport Fellow, Ukrainian endeavors to combine warfare and lawfare are an attempt to set a precedent in their own way: “The Ukrainians have been pretty active and pretty sophisticated in how they leverage various legal avenues to attack the Russians. They’ve been very creative.” She adds: “The route of arbitration is one they’ve been very sophisticated in utilizing to impose sanctions on Russia in a sort of indirect way”.

Moreover, in July 2023, mentioning a Hague court ruling favoring Ukraine’s claims for compensation, which Moscow is to appeal, Naftogaz CEO said:

“We don’t expect Russia to pay voluntarily. It will take time to enforce it and monetize it, and we will be targeting Russian sovereign assets abroad.”

In other words, under the justification that there is an European court decision, Ukraine is illegally seizing Russian assets.

Gazprom ceased to supply gas through Yamal-Europe and the (now gone) Nord Stream and pipelines, thus making the translit line through Ukraine the one and only route to supply Russian gas to Central and Western European countries.

By telling Europeans to be ready to go on without Russian gas, Ukraine’s energy minister Herman Galushchenko is providing music to Washington’s ears. In December 2021, there was an energy crisis in Europe already and I wrote on how the US war on the Nord Stream 2 project made perfect sense from an American perspective: Washington wanted neither to lose leverage on the European continent nor to have Moscow having more leverage there. Moreover, the US created obstacles to Russian-European energy and gas cooperation so as to promote its own resources to European markets. Washington would thus have Europeans buying more and more of American liquified natural gas (LNG) – despite the fact that it is more expensive and despite the fact that Russia lies at the “doorstep” of Europe. These American geoeconomic and private (and even shady) interests play an important role here – in addition to US-led NATO geopolitical goals pertaining to encircling Russia. One cannot make sense of the current conflict without taking those into consideration.

In any case, by refusing to transit Russian gas, which Europeans need, Kiev is basically blackmailing the European bloc, as it hopes to see an ever-larger supply of NATO-provided weaponry and aid. It remains to be seen how European powers will play along.

The hard truth is that the Western strategy to isolate Moscow from global energy markets has been a failure. Of course crude oil supplies to the West have dropped, but overall Russian hydrocarbon exports are back to pre-conflict levels, while India has occupied the share of Western nations when it comes to Russian exports. With rising de-industrialization, the US own subsidy war against the EU, and with sanctions having backfired, it would seem that sooner or later Europe will have no choice but to gradually ease sanctions against the Russian energy resources it badly needs. The framework for that could involve lots of good diplomacy and the de-escalation of tensions. Right now, truth be told, Ukraine’s blackmail handicaps this prospect.

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