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Ukraine just captured a key piece of pipeline infrastructure in Russia — so why is gas still flowing?

Source: Meduza

One day into their unprecedented cross-border raid into Russia’s Kursk region, Ukrainian forces captured the “Sudzha” gas metering station — a crucial part of the last remaining Russian pipeline still sending gas to Europe through Ukraine. Though Ukraine’s incursion into Russia is now in its fourth day, gas transit hasn’t stopped. Meduza breaks down what’s happening with the pipeline, how the capture of “Sudzha” has impacted the market, and why both sides in the conflict need to keep the gas flowing.

The first report that Ukrainian troops had captured the “Sudzha” gas metering station appeared Rybar, a Telegram channel run by a former Russian Defense Ministry employee, on August 7. Later that day, video footage from the region corroborated reports that Ukrainian forces were in control of the station, which is part of the infrastructure for the main pipeline still pumping Russian gas to Europe.

On August 8, an advisor to Ukrainian President Volodymyr Zelensky (speaking on condition of anonymity) told the Washington Post that the Ukrainian Armed Forces (AFU) had taken control of the station. Other leading global media outlets reported this as well.

According to the Center for Information Resilience (CIR), a British nonprofit specializing in open-source analysis, as of August 8, there was no visual confirmation that the gas metering station had sustained damage in the fighting. However, given the close proximity of the clashes and verified video footage of Russian soldiers surrendering at the station’s entrance, CIR told Reuters that it’s “likely that the plant has been affected by the Ukrainian incursion, [though] the level of damage cannot be verified at this time.”

Officially, the Ukrainian authorities have not yet confirmed control over “Sudzha” nor, for that matter, provided any other details about the operation in the Kursk region. However, Ukrainian lawmaker Oleksiy Goncharenko commented on the news, saying: “Our guys heroically took [Vladimir] Putin’s main gas valve in Sudzha. And for three years now, we haven’t been able to collect profits from Russian gas supplies to Europe.”

Why is “Sudzha” important?

Located just 500 meters (547 yards) from the Ukrainian border, the “Sudzha” gas metering station is a critical part of the Urengoy–Pomary–Uzhhorod pipeline — the main (and currently the only operational) route for exporting Russian gas to Europe via Ukraine. Essentially, the station serves as a border checkpoint for Russian gas. Once the gas passes through “Sudzha,” it enters Ukraine’s pipeline system and flows into Slovakia, before continuing on to Czechia and Austria.

In 2023, approximately 14.65 billion cubic meters of gas were pumped through “Sudzha,” accounting for nearly half of all Russian gas exports to Europe. The station’s primary functions are measuring gas flow and monitoring its quality. Losing control of this “gas border” could trigger a force majeure clause, potentially leading Gazprom to suspend gas supplies.

In May 2022, Ukraine declared force majeure at another station that routes Russian gas to Europe — the “Sokhranovka” station. At the time, Ukrtransgaz, the operator of Ukraine’s gas transportation system, cited the loss of operational control over the “Novopskov” compressor station, located in a Russian-occupied area of the Luhansk region, which handled the gas coming from “Sokhranovka.”

Have export volumes and prices been affected?

Despite the capture of the “Sudzha” station by Ukrainian forces, Gazprom hasn’t halted the flow of gas through the station, according to a statement from a Gazprom spokesperson quoted by Interfax. Ukrainian Energy Minister Herman Halushchenko made a similar statement. The volume of gas requested for August 8 was 37.3 million cubic meters — only slightly below the usual daily average of 41 million. The request for August 9 was even higher, at 38.6 million cubic meters.

According to the European Network of Transmission System Operators for Gas (ENTSOG), a slight decrease of about five to 10 percent in the flow of Russian gas through Ukraine was recorded on the morning of August 6. This reduction could simply be due to lower demand, as the heatwave in Europe has subsided, reducing the need for air conditioning and ventilation systems, and gas storage facilities are already 86.5 percent full, approaching the November 1 target of 90 percent.

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Although the export pipeline has remained operational throughout the last two and a half years of active fighting, the recent escalation near the gas corridor has rattled the market: gas prices at the Title Transfer Facility (TTF) hub rose eight percent in just two days, reaching 40.1 euros per megawatt-hour for September delivery contracts — the highest price in Europe this year. In response, Moldova is initiating a state of heightened alert (Transnistria receives its gas via the “Sudzha” station).

“If the transit of Russian gas suddenly stops now, prices for the fourth quarter of 2024 could rise another 20 percent from their current levels,” an analyst from a major Western trading company told Meduza on condition of anonymity. The E.U. countries most vulnerable are those still heavily dependent on Russian gas — Austria, Hungary, and Slovakia. However, Citigroup Inc. analysts believe that “both Russia and Ukraine have the incentives to keep natural gas flowing as normal.”

What other infrastructure is in the area?

In addition to the “Sudzha” gas metering station, there are two other major gas infrastructure sites in the vincinity of the Ukrainian offensive: the “Cheremisinovo” and “Kurskaya” compressor stations. “Cheremisinovo” is located east of the city of Kursk, while “Kurskaya” is in a village south of the city, about 100 kilometers (62 miles) from the town of Sudzha.

Gazprom Transgaz Moscow’s Kursk branch, one of the largest in the country, manages both sites. The Kursk branch oversees 1,700 kilometers (7,270 miles) of main gas pipelines, operates an emergency repair train for pipeline maintenance, and has a workforce of more than 700 employees. So far, no threats to these facilities have been reported in connection with the Ukrainian operation.

What about the gas transit contract?

The current contract for Russian gas transit through Ukraine expires on December 31 of this year, and Kyiv has repeatedly stated that it has no plans to renew it. According to Oleksiy Chernyshov, the CEO of Ukraine’s state-run Naftogaz, Kyiv sees two possible scenarios: either a complete halt to transit or a “model involving alternative suppliers and owners that would ensure specific delivery volumes to E.U. customers.”

At the same time, Ukraine wants to keep its gas transportation system in working order even after the contract with Gazprom ends. “Currently, [the system] is maintained with funds from transit fees. If fuel deliveries stop, someone will need to cover the costs, because we have to maintain it regardless,” Chernyshov said in an interview with NV Business published on August 6. He noted that the cost of maintaining the system is about $1 billion per year — roughly the same amount Ukraine earns from its contract with Gazprom.

One of the options Ukraine is exploring is working with Azerbaijan’s State Oil Company, SOCAR, which could use the Russian and Ukrainian pipelines to deliver its gas to Europe. For now, Naftogaz is only discussing the storage of Azerbaijani gas in Ukrainian facilities, Chernyshov noted. However, even for that, a functioning pipeline is essential.