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After a year of war, why is Russian gas still flowing through Ukraine?

A strange story of energy and economics in the middle of a war.

Europe has responded, though not as forcefully as some would like, cutting its use of Russian oil and gas, investing in other energy sources and vowing to completely phase out Russian imports by 2027. U.S. and European intelligence agencies reportedly now suspect that a pro-Ukrainian group was behind the explosion that damaged the Nord Stream gas pipelines linking Russia and Germany. If true, it would be the most profound indication of the lengths at least some Ukrainians will go to halt these exports. (The government in Kyiv denied any involvement.)

Less discussed is the fact that the vast majority of these energy resources now run through Ukraine itself. Ukraine’s own pipeline system now carries nearly all of Central and Western Europe’s remaining exports of Russian gas. This means that every day, 44 million cubic meters of gas, worth well over $100 million, pass through pipelines owned and maintained by the same country they are shelling and bombing on a daily basis.

“At the start of the war in Ukraine, a lot of commentators thought that Russian gas flows through Ukraine would be the first to go,” Natasha Fielding, head of European gas pricing at Argus Media, an energy analytics firm, told Grid. “And actually, they’re almost the last ones standing.”

It’s a strange and surprising story of what happens when war breaks out in a world of evermore interdependent economies.

A vital link

Ukraine’s gas infrastructure is a crisscrossing network of about 45,000 miles of pipelines. The system dates to Soviet times and at one point supplied 80 percent of Europe’s natural gas. Long before this war, Europe had concern about the reliability of this supply in an era of Russia-Ukraine tensions.

As far as Ukraine is concerned, that contract is still in effect.

“We continue implementing our obligations in terms of transit, which are also our obligations to Europe,” Ukrainian Deputy Prime Minister Olha Stefanishyna told Grid. “Ensuring the transit, according to the international agreements that we have, shows our resilience and credibility. Despite the full-scale war, we still delivered on our obligations.”

Given the extraordinary circumstances, it might seem logical that Ukraine would at least use its leverage over these gas supplies to pressure European countries to cut their imports. But Andrian Prokip, a Kyiv-based energy analyst for the Wilson Center, told Grid, “There’s a fear that this would be seen as blackmailing.”

The energy war within the war

None of this is to say that the system has continued running smoothly.

Ukraine’s energy future

Ironically, the importance of Ukraine for Russian gas exports has only grown since the war began.

While Ukraine might welcome a permanent cutoff as a political matter, the prospect poses economic challenges as well. That’s another irony of the arrangement; Ukraine would rather not have Europe doing any business with Russia — but shutting down this particular link would upend one of Ukraine’s key industries at a time of acute economic distress. Prokip, the Kyiv-based energy analyst, noted that Ukraine may play a future role in energy exports moving between Northern Europe, Southern Europe and Turkey, but without Russian supplies, there probably just isn’t enough gas to provide the volumes that Ukraine’s pipeline system was designed for.

If that happens, it might finally sever one of the most lasting and strangest links between Ukraine and Russia.

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