During the East German Economic Forum in Bad Saarow, the German Minister of Economics, Robert Habeck, made it clear that Germany might be forced to take drastic measures if an extension of the gas transit contracts between Russia and Ukraine is not possible. In particular, Habeck stated that Germany would have to reduce or even shut down its industrial capacities if energy becomes scarce. In this way, he wants to help other countries like Austria or Hungary that are dependent on Russian gas supplies (Welt: 12.06.23).
Uncertain future of energy supply in Europe: Gas transit contracts between Russia and Ukraine expire
This statement makes clear that the future of energy supply in Europe is still uncertain, as the gas transit contracts between Russia and Ukraine expire next year. Currently, significant volumes of natural gas from Russia are still coming into Europe through pipelines that cross Ukrainian territory. If there is no extension of the transit agreements, there is a possibility that gas transit will be restricted or stopped altogether. This would have a massive impact on the energy supply in.
In view of this uncertainty, Habeck stressed Germany’s willingness to help its neighbouring countries. He explained that Germany would curb its industry if necessary. This would be necessary to ensure that the supply of other countries such as Austria or Hungary continues to be guaranteed. However, this measure would mean that Germany would have to reduce or even shut down industrial capacities. However, Habeck also stressed that the final decision would depend on how the situation develops.
Transit contracts between Russia and Ukraine expire in 2024
The statements of the Economics Minister highlight the complexity and potential impact associated with the expiry of the gas transit contracts.
“We should not let ourselves be distracted by the current good situation and ignore the looming danger,” the minister warned. “It is important to point out that the transit contracts between Russia and Ukraine expire in 2024.”
“In addition, we must not forget the ongoing war. There is no sure idea of how things will go in the future,” the minister said. “If Russian gas stops flowing through Ukraine to Eastern Europe at the same rate as before, we must adhere to the principles agreed upon by Europe. Before the people there freeze, we would have to curb or even shut down our industry if necessary.”
Expiring gas transit contracts threaten energy supply
These clear words illustrate the serious threat and possible consequences that the expiry of the gas transit contracts could bring. It becomes clear that there is an urgent need for action to guarantee the energy supply in the region and to mitigate the effects on the population.
In order to maintain the energy supply in Eastern Germany and Eastern Europe, additional capacities are essential. According to Habeck, this also includes the planned LNG terminal off the island of Rügen, which is controversial due to opposition from local residents and environmental groups. Although it is as a result of the Russian invasion in February, Ukraine still receives transit fees for the passage of Russian gas to countries such as Austria, Slovakia, Italy and Hungary.
Even if some supplies continue beyond 2024, it will most likely be under changed conditions. A report by the Center on Global Energy Policy stresses that direct negotiations between Ukraine and Russia to extend the transit contract are highly unlikely in the current situation. The authors of the report, Anne-Sophie Corbeau and Tatiana Mitrova, note that political support for such negotiations is lacking.
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