The European Union, encouraged by positive developments around the gas crisis in the region and high reserves of “blue fuel” left in its storages after the cold season, has started turning up the heat against Russian suppliers, targeting both pipeline and sea gas shipments.

At a press conference following the meeting of EU Council’s energy ministers in early March, European Commissioner for Energy Kadri Simson said the Union was not interested in extending the agreement on gas transit from Russia via Ukraine that expires in late 2024, while further using the Ukrainian gas transmission system (GTS) and gas storage facilities to “accommodate” European gas reserves.

In turn, Prime Minister of Ukraine Denis Shmygal stated this spring that Kiev was ready to extend the transit after the contract with Gazprom expired, though loathed direct negotiations with Moscow. He admitted that transit is possible in case of a relevant request from European countries. Head of the Ukrainian GTS Operator Dmitry Lippa has explained that once the European Union needs Russian gas, Ukraine is okay with the option of extending cooperation with Gazprom until 2027.

The agreement between Ukraine’s Naftogaz and Russia’s gas giant was signed in late December 2019 to stipulate pumping 225 billion cubic meters of gas, of which 65 billion cubic meters were meant in 2020, and the next four years to feature 40 billion cubic meters each. The contract expires on December 31, 2024.

Now Kiev is clearly echoing Brussels: on March 18, Energy Minister German Galushchenko said the authorities had no plans to prolong the transit contract with Gazprom. This statement has revealed obvious political bias and one-sidedness, as there is no commercial rationality, given that Ukraine will be thus deprived of substantial transit fees Gazprom consistently pays.

The prospect for such a scenario will presumably actualize other systems for delivering Russian gas to the EU. This certainly refers to the undermined trans-Baltic Nord Stream pipelines.

First, one of the two threads of Nord Stream 2 has miraculously survived the terrorist attacks, and Gazprom is ready to begin using it “even tomorrow, if you please,” as Russian President Vladimir Putin puts it. What matters here is the will of European buyers, primarily Germany that hosts the Nord Stream and Nord Stream 2 gas trunk-line systems.

Second, we were talking about return to duty of the three destroyed threads, inasmuch as the Nord Stream operator company Nord Stream AG announced a cost sheet for restoring the damaged pipes — it could reach €1.35 billion.

In addition, Nord Stream AG filed a lawsuit in the High Court of London demanding that insurance companies Lloyd's of London and Arch Insurance pay €400 million over their refusal to cover damage after the blasts of September 2022. This was reported by Britain’s The Financial Times (FT).

According to the outlet, the lawsuit was filed in February as the operator indicated that insurance companies did not pay for damage estimated at €1.2 – 1.35 billion, which is a lot higher than the claim itself. The funds were meant to pump water out of the pipelines, fix them, and purchase as much gas as was lost in the blasts.

Oddly enough, the operator did not come to realize this earlier to file its claims. Still, the insurers might have explained the delay in covering damage by the need to wait for official investigation results — the final resolution would have made sure if a warranty case occurred at all. And so, Nord Stream AG patiently waited for signals from the investigators. Germany’ inquiry is still underway, while Sweden and Denmark “closed the case” in February with null findings and without indicating the saboteurs’ jurisdiction. Berlin is also hardly interested in identifying those responsible, choosing to endlessly delay the process. Therefore, Nord Stream AG lawyers got simply tired of “whistling for a wind” and took active action by filing claims against the abovementioned insurers. Nord Stream AG does have a chance to win the case, because political bias should not prevail when it comes to the global reputation of the London High Court and the local insurance community.

Meanwhile, Brussels has intensified threats against Russia’s maritime gas supplies. Kadri Simson told Bloomberg that the European Commission sought cuts in purchases of Russian liquefied natural gas (LNG) this year. “In the EU, we are progressively building up pressure on European players to reduce Russian LNG purchases, and here again confidence in US supplies is important,” she said after a Washington meeting of the US-EU Energy Council on March 15.

Brussels’ message is radical, but at the level of individual states, things are not that simple. For example, Germany’s party opposition has asked the federal authorities to justify reliability of American LNG supplies. A parliamentary request from the Alternative for Germany party has emphasized the need to review Russia gas policy over doubts about future energy supplies by the United States.

The problem of Europe's strategic energy security has not been resolved at all: market risks are still high (for example, the second ten days of March saw a noticeably rise in EU’s gas prices). And battles with Asian consumers forecast by industry experts for “blue fuel” batches that were unavailable this past winter remain relevant for subsequent heating seasons. Therefore, Brussels is taking a big risk by putting its stake on a total waiver of Russian gas.