Russia stands to lose $6.5 billion a year if Ukraine doesn’t renew a gas pipeline deal at the end of the year, report says

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  • Russia’s energy revenue could take another hit if Ukraine doesn’t renew a key gas deal by the end of the year.

  • Losses could mount to $6.5 billion a year for Moscow, per Bloomberg’s calculations.

  • Europe, which gets around 5% of its gas supply through the deal, could also be affected.

Russia could end up losing billions if Ukraine turns its back on a deal to keep gas flowing from the country.

Ukraine’s state-run energy giant, Naftogaz, is up to renew its gas pipeline deal with Russia’s Gazprom by the end of the year. The two nations are in talks, but an agreement is unlikely before the deal expires in December — potentially hitting Russia with losses as high as $6.5 billion a year, according to calculations from Bloomberg.

Ending the pipeline deal would be a blow to Russia’s gas trade, which is a key lifeline for the economy as it navigates a third year of war in Ukraine. Moscow has already weathered big losses from Western sanctions targeting its oil and gas sales, which plunged 24% last year.

Ukraine, too, could face losses. The nation could lose around $800 million a year in transit fees, the report said, citing estimates from a Kyiv consulting firm.

Europe’s energy security could also be affected. The continent has shifted away from Russian energy over the past two years, but it still gets gas from Russia via two pipelines. The deal set to expire at the end of the year accounts for 5% of Europe’s total gas flows, the report added.

Moscow, which once supplied as much as 40% of Europe’s gas, has dialed back its energy flow to Europe and ramped up its exports elsewhere. Recently, Russia established a gas pipeline deal with China, which has become one of its largest trading partners.

Still, experts say Russia’s economy remains on rocky footing, especially given the mounting costs of its war against Ukraine. The nation is worse off financially after slowing its natural gas exports to the continent, one Yale analysis found, given its difficulties passing off its energy supplies to other nations without steep discounts.

Read the original article on Business Insider

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