Gasan Ramazanov: Europeans may face rising electricity prices

Gasan Ramazanov, expert at the Gaidar Institute, told TASS how Europe feels after cancellation of Russian gas transit through Ukraine.

The expert believes that European consumers may experience a rise in prices this summer when it will be necessary to fill gas storage facilities amid the suspension of Russian gas supplies through Ukraine. Ramazanov noted that as of early January, public data showed that storage facilities, which play an important role in maintaining the EU's energy security, were 59% full at the beginning of this week, down 15% from the same period in the previous year. According to the International Energy Agency, the suspension of supplies through Ukraine will increase the cost of energy resources for end consumers. Consumers in Europe will notice the price increase already in summer, when European gas storages will need to be filled.

Ramazanov also recalled the European Commission's decision to push for the extension of mandatory gas reserve requirements in the EU countries. This may also increase the cost of gas on the international market. According to the expert, Kiev's termination of Russian gas transit will result in the growing dependence of the European market on LNG supplies from third countries.

“As part of the European Commission's REPowerEU plan to phase out consumption of Russian fossil fuel by 2030, measures have been developed that include improving energy efficiency by EU countries, increasing imports of LNG, which is mainly supplied from the US, and increasing the share of renewable energy sources,” Ramazanov pointed out.     

Following the termination of Russian gas transit through Ukraine, the EU is considering 4 main diversification routes for gas supplies to Europe. An import route via Germany based on a large expansion of Germany's LNG import capacity and imports of piped gas from Norway, the Netherlands and Belgium. This could ensure delivery of additional gas supplies to Austria, the Czech Republic and Slovakia using existing infrastructure.

The next route is to import through Poland, which may facilitate access to Norwegian gas and LNG for Central European countries. Next, is an import route through Italy to transport gas north via Austria and to Slovakia and Slovenia.

Another route is trans-Balkan from Turkey to supply gas to southern and central Europe. It should be noted that European gas prices rose by 4.3 % to almost €51 on the first trading day after Ukraine stopped the transit of Russian natural gas to Central Europe.

Monday, 27.01.2025