European consumers may face gas price increases in early 2020 if Russia and Ukraine fail to agree on the transit of Russian fuel through Ukrainian territory. This opinion was expressed in an interview with Liga.net by the chairman of the board of Naftogaz Ukrainy Andriy Kobolev.

“Crisis prices are difficult to predict, but I think I will not be mistaken if I say that the price may double at first. For example, in March 2018, when Gazprom refused to supply prepaid gas, the price increased by 80% in a few hours, ”Kobolev said.

According to him, the rising cost of raw materials in the European Union will lead to a similar process in Ukraine. He also assured that Ukraine, in the absence of any force majeure situations, will be able to calmly pass the winter, even if the transit agreement is not extended.

“We have record gas reserves, and we are ready to do without import during the first quarter of 2020. We tried to prepare both technically and operationally for different situations, ”said Kobolev.

The head of Naftogaz also called the scenario unlikely in which a Russian company would continue to transit gas to Europe without concluding a contract with the Ukrainian side.

“If we hypothetically assume that there is no contract, but there is gas supply, then taking such a resource carries certain risks for Ukraine. If you take gas without a contract, we will have no reason to measure it. And, accordingly, either side, for example. Russian, may accuse us of stealing gas. In addition, we may be accused of smuggling. This is a serious matter, ”he explained.

On November 26, Naftogaz’s executive director, Yuriy Vitrenko, wrote on Facebook that in the absence of an agreement, “gas of undetermined ownership” coming from the Russian Federation and destined for Europeans will be pumped by Ukraine into its own storage facilities while the raw materials are documented.

Earlier, Minister of Energy and Environmental Protection of Ukraine Oleksiy Orzhel stated that tentatively on December 5 the next round of tripartite consultations on gas (Russia, Ukraine, the European Union) is scheduled. The head of the Russian Ministry of Energy, Alexander Novak, admitted the possibility of holding a meeting that day if Naftogaz and Gazprom come to a consensus on technical details.

  • Archival photo from trilateral consultations in the Russia-EU-Ukraine format on the transit of Russian gas

Meanwhile, the Hromadske portal, citing the press service of the Ukrainian energy ministry, reported a breakdown in negotiations scheduled for this date.

Now the discussion of gas transit through Ukraine may take place on December 9, when the Norman Four summit will be held in Paris. According to Ukrainian leader Vladimir Zelensky, this topic can be raised at a meeting which Russian President Vladimir Putin also attends.

“There will be stress anyway”

An expert at the National Energy Security Fund, a lecturer at the Financial University under the Government of Russia, Stanislav Mitrakhovich, in an interview with RT, called “speculative” a statement by the head of Naftogaz Andrei Kobolev that gas prices in Europe could double if there is no agreement on fuel transit through Ukraine.

“If transit stops, in a panic, gas exchanges may react with very fast price hikes. This does not mean that the price will necessarily double; it can rise one and a half times. If interruption of transit is accompanied by other problems, then growth can occur twice. But I still think that this is hardly to be expected. In any case, there will be stress for the gas situation, ”the expert said.

In his opinion, the Ukrainian side is trying to force European countries to “put pressure” on Gazprom with such statements. However, he did not rule out the possibility of supplying Russian gas without a contract.

“In principle, deliveries without a contract are possible. They already were. In January-February 2019, Russian gas went to Armenia through Georgia without a contract, and then the countries agreed after the fact, and the transit cost was paid, ”the expert emphasized.

Director of the Energy Development Fund Sergei Pikin also called Kobolev’s words a “horror story” for Europeans, but noted that even in the event of a transit stop, Europe has fuel reserves.

“According to the classics of the genre, this statement is called active market manipulation. It is clear that the gas market is very volatile, and it is very sensitive to any change in supply. You don’t have to go far for examples: when there were abnormally cold periods in winter, prices also took off many times and reached very serious values, ”the source said.