“The fact that transit will not be extended in the sense of the current contract does not mean it will be excluded in principle. This is a form of Ukraine inflating its self-importance,” Stanislav Mitrakhovich, a senior expert at Russia’s National Energy Security Fund and expert with the Financial university under the government of the Russian Federation, told Sputnik, commenting on Kiev’s announcement that it would not extend the Gazprom-Naftogaz gas transit agreement.
But the only other real option Kiev has if it doesn’t want to see its vast Soviet-era pipeline infrastructure fall idle is to import gas from the EU – which makes no sense, given Ukraine’s economic and security predicament, and the unenviable state of its transportation and distribution systems, Mitrakhovich said.
“Therefore, there’s more than a 90% probability that transit will continue. The current contract will not be extended, but another one will be concluded involving the purchase of Russian gas on the Russian-Ukrainian border,” the analyst said, noting that a similar scheme has already been implemented on oil deliveries via the Druzhba oil pipeline.
In the latter case, “the Ukrainian side is still there, but the customer is no longer Russian companies selling oil in Europe, but European companies, which get the rights to this oil the moment it crosses the border,” Mitrakhovich explained.
Simulacra and Simulation in the Energy Sector
As for Prime Minister Shmyhal's talk Monday about creating a Baumgarten, Austria-style “Eastern European energy hub,” this too is just an attempt by authorities in Kiev to inflate their self-importance, and “makes no economic sense” without Russian gas, and given the alternatives that are available, the observer believes.
With that said, Mitrakhovich doesn’t rule out Kiev’s European donors shelling out some cash to “simulate the appearance of a hub” for political reasons. If that occurs, it would be more of a “news event than the creation of a real trading platform in which Austrian, Hungarian and Slovak companies would be interested in,” the observer said.