Ukraine halts gas transit, ending Russian gas era in Europe

KYIV,— Russian gas exports through pipelines running across Ukraine came to a halt on January 1, 2025, signaling the end of Moscow’s decades-long control over Europe’s energy markets.

The cessation followed Ukraine’s refusal to extend a transit agreement, according to Gazprom, Russia’s state-run energy company. The interruption, which had been widely anticipated, marks a shift in Europe’s energy landscape, although it is not expected to have an immediate impact on consumer prices in the European Union.

During the height of the energy crisis in 2022, reduced Russian gas supplies had led to skyrocketing prices, exacerbating inflation and putting pressure on EU economies.

However, European countries have since made strides in reducing their dependence on Russian energy by diversifying their sources. Key buyers of Russian gas, including Slovakia and Austria, have secured alternative supplies, while Hungary will continue to receive Russian gas through the TurkStream pipeline, which runs under the Black Sea.

Meanwhile, the breakaway pro-Russian region of Transdniestria in Moldova, which also relied on Russian gas transiting through Ukraine, faced energy shortages. Local authorities in Transdniestria shut off heating and hot water for households, urging residents to stay warm by using blankets and electric heaters.

Ukrainian President Volodymyr Zelensky described the halt of Russian gas transit as a major setback for Moscow and a “historic moment” for Ukraine. He urged the U.S. to increase gas supplies to Europe in order to speed up the continent’s energy independence from Russia.

In a post on the Telegram messaging app, Zelensky highlighted the importance of supporting Moldova during this “energy transformation” period.

The European Commission had already braced for the gas disruption, with a spokesperson reassuring that the EU’s gas infrastructure had been reinforced.

A spokesperson stated that Europe’s gas infrastructure is capable of handling non-Russian gas. Since 2022, it has been strengthened with substantial new LNG import capacities.

The cessation of gas flows represents a blow to Russia, which had once controlled about 35% of the European gas market. Since the war in Ukraine began, the EU has increasingly relied on Norway for piped gas and has ramped up LNG imports from Qatar and the United States.

Ukraine’s refusal to extend the deal means it will lose up to $1 billion annually in transit fees, though it plans to offset the loss by raising gas transmission tariffs for domestic consumers. At the same time, Gazprom faces losses of around $5 billion due to reduced gas exports.

The reduction in Russian gas flowing through Ukraine has been notable. In 2023, only 15 billion cubic meters (bcm) of Russian gas were shipped via Ukraine, down from 65 bcm in 2020, when the last five-year contract was still in effect.

The once-prominent Nord Stream pipeline, which traversed the Baltic Sea to Germany, was damaged in 2022, and the Yamal-Europe pipeline, which ran through Belarus, has also been shut down.

Slovakia, which was one of the last EU countries still receiving Russian gas through Ukraine, has adapted by sourcing gas from Germany and Hungary, though it faces higher transit costs. Austria also saw a sharp decline in Russian gas deliveries, from 200 gigawatt hours (GWh) per day in recent weeks to just 7 GWh per day starting on January 1.

As the EU works to eliminate its reliance on Russian gas, the geopolitical and economic consequences of this transition will continue to unfold. The move away from Russian energy is seen as a long-term strategy to secure Europe’s energy future and reduce vulnerability to Moscow’s influence.

(With files from Reuters)