PRESS
MOSCOW/KYIV, Jan 1 (Reuters) – Russian natural gas exports via Soviet-era pipelines running through Ukraine to Europe were halted in the early hours of New Year’s Day as a transit deal expired and warring Moscow and Kyiv have failed to reach an agreement to continue the flows.
The shutdown of Russia’s oldest gas route to Europe ends a decade of fraught relations sparked by Russia’s seizure of Crimea in 2014. Ukraine stopped buying Russian gas the following year.
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“We stopped the transit of Russian gas. This is a historic event. Russia is losing its markets, it will suffer financial losses. Europe has already made the decision to abandon Russian gas,” Ukraine’s Energy Minister German Galushchenko said in a statement.
The stoppage of gas flows was expected amid the war, which started in February 2022. Ukraine has been adamant it would not extend the deal amid the military conflict.
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According to an industry source, Gazprom last year assumed the absence of the gas transit via Ukraine, which accounted for roughly a half of Russia’s total pipeline gas exports to Europe.
Russia still exports gas via the TurkStream pipeline on the bed of the Black Sea. TurkStream has two lines – one for the Turkish domestic market and the other supplying central European customers including Hungary and Serbia.
The European Union redoubled its efforts to reduce its dependence on Russian energy after the outbreak of the military conflict in Ukraine in 2022 by seeking alternative sources.
The remaining buyers of Russian gas via Ukraine such as Slovakia and Austria have also arranged alternative supply.
Moldova, once part of the Soviet Union, is among the countries worst affected. It says it will now need to introduce measures to reduce its gas use by a third.
There were no immediate comments from Europe in the early hours of Wednesday.
The five-year gas transit deal between Russia and Ukraine expired early on Jan. 1.
“Due to the repeated and clearly expressed refusal of the Ukrainian side to renew these agreements, Gazprom was deprived of the technical and legal ability to supply gas for transit through the territory of Ukraine from January 1, 2025,” Gazprom said in a statement on the Telegram messaging app.
“Starting from 08:00 Moscow time (0500 GMT), the supply of Russian gas for its transportation through the territory of Ukraine is not carried out.”
Ukraine’s energy ministry also said the transportation of Russian gas through Ukraine “has been stopped in the interests of national security”.
Ukraine now faces the loss of some $800 million a year in transit fees from Russia, while Gazprom will lose close to $5 billion in gas sales.
OTHER ROUTES
Russia and the former Soviet Union spent half a century building up a major share of the European gas market, which at its peak stood at around 35%, but the war has all but destroyed that business for Gazprom.
The Yamal-Europe pipeline via Belarus has also shut and the Nord Stream route across the Baltic Sea to Germany was blown up in 2022.
Combined, the various routes delivered a record high 201 billion cubic metres (bcm) of gas to Europe in 2018.
Russia shipped about 15 bcm of gas via Ukraine in 2023, down from 65 bcm when the last five-year contract began in 2020.
Russia Suspends Flow of Natural Gas to Europe Through Ukraine
In a move that has sent ripples across global energy markets, Russia has announced the suspension of natural gas deliveries to Europe via Ukraine. This decision marks a significant escalation in the ongoing geopolitical and economic tensions between Moscow and the West, with far-reaching implications for energy security, market stability, and political alliances.
Context of the Suspension
The suspension follows months of strained relations exacerbated by the ongoing conflict in Ukraine. Russia’s decision to halt gas supplies through this crucial transit route underscores the deepening divide between the two nations and raises questions about the reliability of energy supplies to Europe. Historically, Ukraine has been a key transit country for Russian gas destined for European markets, making it a linchpin in the continent’s energy infrastructure.
Implications for Europe
Europe relies heavily on natural gas from Russia, with some nations sourcing up to 40% of their supply from the country. The suspension through Ukraine could lead to significant energy shortages, particularly in countries with limited access to alternative suppliers or infrastructure. As winter intensifies, the demand for heating and electricity is expected to surge, amplifying the impact of the gas shortfall.
This disruption has already spurred European nations to accelerate their search for alternative energy sources. Liquefied natural gas (LNG) imports, renewable energy projects, and the expansion of pipelines from non-Russian suppliers are among the strategies being considered. However, these measures may not fully offset the immediate loss of Russian gas, leading to potential price hikes and energy rationing in the short term.
SWORD
Economic and Political Ramifications
The suspension is likely to exacerbate economic challenges in Europe, including inflation and industrial slowdowns. Rising energy prices could strain household budgets, disrupt manufacturing processes, and weaken economic growth across the continent.
Politically, the move may deepen divisions within the European Union (EU) as member states grapple with differing levels of exposure to Russian gas. Countries with greater energy independence may push for more aggressive sanctions against Moscow, while those heavily reliant on Russian imports could advocate for a more measured approach to avoid further disruptions.
Russia’s Perspective
From Russia’s standpoint, the suspension of gas through Ukraine may be seen as a strategic lever in its broader conflict with the West. By targeting Europe’s energy security, Moscow could be attempting to pressure European leaders into reconsidering their support for Ukraine. Additionally, Russia has increasingly shifted its focus toward exporting energy to Asian markets, potentially mitigating the economic impact of reduced European sales.
The Role of Ukraine
For Ukraine, the suspension represents both a loss of transit revenues and a new front in its struggle against Russian aggression. Kyiv has long advocated for Europe to reduce its dependence on Russian energy, emphasizing the risks of over-reliance on a single supplier. This latest development underscores the urgency of those warnings.
The Path Forward
The suspension of natural gas flows through Ukraine highlights the fragility of Europe’s energy security in the face of geopolitical upheaval. In the coming months, European nations will need to balance the immediate need for energy supplies with long-term strategies to diversify and decarbonize their energy systems.
International efforts to mediate the crisis will also be critical. Diplomatic engagement, combined with investments in energy infrastructure and renewable resources, could help mitigate the fallout and prevent further escalations. However, the path to resolution remains uncertain, with both sides entrenched in their positions.
As the world watches this unfolding crisis, the suspension serves as a stark reminder of the intricate ties between energy and geopolitics. For Europe, it is a call to action to build a more resilient and sustainable energy future.
