Why does the U.S. want to control Ukraine's natural gas pipelines?

Author: Olga Samofalova

If the new owner of Ukraine's natural gas pipeline becomes an American, Russia is ready to resume the transportation of natural gas through Ukraine. The U.S. not only demands rare earth metals from Ukraine but also has its eyes on its natural gas transport system. Considering that American liquefied natural gas is a direct competitor to Russian natural gas in Europe, would this really bring practical benefits to Gazprom?

Reuters reported that the U.S. also requested control over the gas network connecting Russia and Europe in its agreement project with Ukraine regarding rare earth metals. Russia is prepared to cooperate with the new owner of Ukraine's gas transportation system.

"If the new owner agrees to sign contracts with Gazprom, why not? This is purely a business issue, we have never politicized it. Gazprom will definitely discuss this." Dmitry Peskov, press secretary of the Russian president, told French magazine "Le Point". According to him, Russia is ready for negotiations on gas issues and knows that some European countries wish to continue purchasing Russian natural gas.

Since 2025, Russia has ceased the operation of transporting natural gas through Ukraine to Europe because the long-term transit contract expired. The Ukrainian authorities refused to discuss new agreements. However, even without new agreements, the transit transportation of natural gas can be achieved by auctioning pipeline capacity, a method widely used in Europe. Moreover, Ukraine has carried out reforms and abides by European norms, which should include such auctions. But Kiev did not do so for political reasons: they do not want to see any form of Russian natural gas. They even rejected the idea of moving the natural gas sales point to the Ukraine-Russia border, where the ownership of the gas would change to any buyer or trader upon entering Ukrainian territory, thereby no longer being considered as Russian gas in form.

If the owner of the gas transportation system becomes an American, they will have the same set of measures to restore the transit transportation of natural gas - either sign long-term contracts with Gazprom or conduct auctions.

"However, one thing is to reach an agreement with Ukraine to sell or transfer its gas transportation system to the U.S. to offset the debt of provided weapons and financial assistance. On the other hand, who among American commercial companies would be willing to take over Ukraine's pipelines even for free? First, the Ukrainian government may impose some restrictions on the cooperation between the gas transportation system and Russian gas, which would scare off any investors. Second, the new owner will bear the costs of maintaining and repairing the transit pipelines and domestic gas distribution pipelines, and possibly even the underground storage facilities.

Investors hope to recover their investments, and this is impossible without guarantees for specific use of the transit pipelines. If Ukraine's gas transportation system only serves domestic consumers within Ukraine, it is unlikely that anyone would risk becoming its owner."

Igor Yushkov, an expert at the Financial University under the Government of Russia and the National Energy Security Fund (FNEB), analyzed.

For Russia, it is beneficial for Gazprom to increase its natural gas supply to Europe and recover lost revenue. However, there are some problems for Gazprom to return to the European market.

"Many European consumers have filed lawsuits with arbitration institutions against Gazprom, complaining that Gazprom did not fulfill the contractual terms when reducing Russian gas supplies in 2022. Arbitration institutions supported the European side and ruled that Gazprom owed money. Therefore, there is a risk that when Gazprom starts supplying gas to them again, these European companies may file lawsuits again to seize the gas to offset the debt." An expert from the National Energy Security Fund stated.

Therefore, the expert added that before resuming the supply of natural gas through Ukraine (or other routes), Gazprom should first reach agreements with some European companies to let them "start from scratch".

On the other hand, America's intention to allow a large amount of Russian natural gas to return to the European market is not very clear.

"After all, Americans want to see their own liquefied natural gas in the European market. In this regard, America is more likely to continue pushing Russia out of the European natural gas market to clear the way for its own sales market." Yushkov said.

It is quite difficult to come up with strong reasons to explain why the U.S. wants to help Gazprom send a large amount of energy back to Europe.

"The only reason that supports the argument that the U.S. would approve the transportation of Russian natural gas through Ukraine or other proposed routes is that Americans do not want the European market to further stagnate. The energy prices in Europe are still relatively high, so Europeans cannot restore consumption scale, and the consumption scale continues to stagnate. This is disadvantageous for Americans because it will shrink the entire sales market for American products, ultimately leading to a general decline in global prices. If Europeans reduce their consumption of liquefied natural gas, it will result in oversupply and a drop in prices." Igor Yushkov analyzed.

American liquefied natural gas needs a sales market, and it is a high-priced market rather than a low-priced one. Meanwhile, America plans to significantly expand its liquefied natural gas export capacity between 2027 and 2028. Perhaps, America wants to gain control of Ukraine's pipelines to be able to regulate the timing and volume of Russian natural gas entering the European market according to its own interests.

As for Ukraine, it would be convenient for it to push the responsibility of operating the gas transportation system onto others, as this system brings no profit without natural gas transit transportation, yet requires constant maintenance and normal operation. Respondents pointed out. However, this may have negative impacts on ordinary Ukrainians and the entire Ukrainian economy.

"New American owners are likely to pressure Ukrainians to raise the price of gas transportation to make a profit. This means that the price of all natural gas in the country will rise, followed by electricity and heating prices also rising. All of these will lead to higher inflation and lower living standards for the public." An expert from the National Energy Security Fund summarized.

However, overall, experts are highly skeptical that the U.S. would truly act in Russia's interest by restoring the transit of natural gas through Ukraine or the operation of any Russian gas pipeline route, including Nord Stream.

"I think this is just a ploy to confuse Russia, aiming to make Russia make concessions to mediate the conflict in Ukraine, then say: sorry, it didn't work. I am skeptical about the prospect of America promoting the export of Russian natural gas to Europe in any way." Yushkov believed.

"I doubt whether the topic of America's involvement in the management of Ukraine's gas transportation system is really being seriously discussed. At this stage, this topic can be included in the negotiation process, either as a diplomatic lever or to disrupt negotiations. In the former case, you can easily discard this lever to show your willingness to compromise. In the latter case, you can continue to insist on managing the gas transportation system to let the other party disrupt the negotiations, then you can tell everyone that you tried until the end." Alexander Frolov, deputy director of the National Energy Research Institute and editor-in-chief of the industry media "Information Technology" ("InfoTek"), concluded.

Original source: https://www.toutiao.com/article/7497134756337877545/

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