On 9 January 2025, the text of draft law No. 12380, dated 7 January 2025, initiated by the European Solidarity political party led by Petro Poroshenko, was published.
Background
According to the explanatory note accompanying the draft law, approximately 15 billion cubic meters of gas and 14.5 million tonnes of oil of Russian origin transited through Ukraine in 2024. This transit generates nearly $12 billion annually, directly contributing to the enemy’s military budget.
At 7:00 a.m. Kyiv time on 1 January 2025, the Agreement on Interaction between the Ukrainian GTS Operator LLC and Gazprom PJSC, signed on 30 December 2019, expired. This agreement governed the physical connection points between the gas transmission systems of Ukraine and the Russian Federation.
Provisions of the Draft Law
Oil Transit Prohibition
The draft law proposes a prohibition on the movement (including transit and import) of oil of non-Ukrainian origin through Ukraine’s territory via oil pipelines. This restriction applies to entry points on Ukraine’s state borders with the Russian Federation and the Republic of Belarus for the duration of martial law. However, Article 4 specifies that this provision will take effect only six months after the law’s publication.
Gas Transit Prohibition
From 1 January 2025, the draft law prohibits the movement (including transit and import) of natural gas of non-Ukrainian origin through Ukraine’s gas pipelines from entry points on the state borders with the Russian Federation and the Republic of Belarus. This ban will remain in effect for the duration of martial law.
Conclusions
While Ukraine has ceased Russian gas transit, oil continues to flow via the Druzhba pipeline under a contract valid until 2030. The ten-year agreement between Ukrtransnafta and Transneft, effective from 1 January 2020, raises questions about the mechanisms and timeline for its termination. In contrast, the gas transit contract expired, and no new agreement has been signed with Gazprom.
The termination of the gas transit contract will result in a GDP loss of approximately 0.5%, potentially undermining Ukraine’s strategic role as Europe’s energy partner. Ukraine previously earned about $800 million annually from gas transit and $200 million from oil transit.
Ukraine’s decision to halt gas transit will likely benefit LNG suppliers to Europe. In the first half of 2024, 48% of European LNG imports originated from the United States, 16% from Russia, 11% from Algeria, 10% from Qatar, and 4% from Nigeria and Norway.
However, given the war, the refusal to transit Russian oil and gas has a significant emotional and psychological impact.
Political Gains from the Transit Debate
Moreover, the issue of transit is already being used to score political points by forces aspiring to return to power. At the end of 2024, numerous statements about halting transit were made by so-called experts — former employees of the gas transmission system. These included ex-head Serhiy Makohon, who is suing the Ukrainian GTS Operator from abroad over a 10.5 million UAH bonus; former Naftogaz head Andriy Kobolyev, accused by NABU of unlawfully awarding himself bonuses exceeding 229 million UAH; former MP Viktoriya Voytsitska; and others.
Former President Petro Poroshenko, after Russia’s occupation of Crimea and Donbas in 2014-2015, was involved in the resumption of operations of the diesel pipeline supplying Russian diesel fuel to Ukraine. He also facilitated the rise and rapid expansion of Glusco and Wexler — entities that served as intermediaries for Rosneft fuel in Ukraine through the mediation of MP and traitor Viktor Medvedchuk — as well as other questionable projects in Ukraine’s energy sector.
All of the above mentioned individuals, having held absolute power and authority, could have stopped the transit of Russian energy resources back in 2014. Yet, they only recalled Ukraine a decade later.
In the photo: Signing of the gas contract, Oleksiy Miller (Gazprom) and Andriy Kobolyev (Naftogaz), 2014.
