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Insight 17 December 2019

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Report summary

Ukraine and Russia are locked in ongoing negotiations over the future of Russian gas transit into Europe via Ukraine. The existing transit and supply contracts expire at 10 am on 1 January (Moscow time). If the two sides fail to reach an agreement, Europe will wake up to a new decade wrestling with gas shortages in the middle of winter – the severity of which will depend on several factors. We explore three possible disruption scenarios to provide a range of price implications for Northwest European markets. Europe has a range of levers to help bring the gas market back towards balance. Some will need to be pulled more than others, with the consequences stretching well beyond European borders. But it is Central and Eastern European markets along with Ukraine itself who will suffer most from any disruption.

Introduction
Implications for Northwest European hub prices
European gas markets have four levers to soften a shortfall
Some markets will be much more exposed than others...
Conclusions
Appendix
- Major events in Ukraine-Russia gas relationships (since 2000)
- 2005-06
- 2008-09
- 2014
- 2015
- 2017/18
- 2019
- Side’s positions in negotiations

Tables and charts

This report includes 7 images and tables including:

Transit routes of Russian gas into Europe
TTF under the three scenarios
Europe gas market reaction in 2020 to long-term Ukraine transit disruption (Scenario 1)