On New Year’s Day, Russian gas exports through Soviet-era pipelines running via Ukraine came to a halt, marking the end of decades-long dominance of Moscow over Europe’s energy markets. Gazprom, Russia’s state-owned energy firm, announced the stoppage at 0500 GMT, citing Ukraine’s refusal to renew a transit agreement.
Impact on European Gas Markets
Unlike the disruptions of 2022 that sent gas prices soaring and worsened the EU’s cost-of-living crisis, this development is expected to have minimal impact on consumers. European Union countries have prepared for alternative supplies, reducing dependence on Russian gas by securing liquefied natural gas (LNG) from the United States and Qatar, as well as piped gas from Norway.
Transition to Alternative Supplies
Slovakia and Austria, former recipients of Russian gas via Ukraine, have secured alternative sources. Hungary continues to receive Russian gas via the TurkStream pipeline under the Black Sea. However, Transdniestria, a pro-Russian breakaway region of Moldova, faced immediate challenges, cutting off heating and hot water to households. Local authorities advised residents to use electric heaters and insulate homes against the cold.
Ukraine’s Response and EU’s Energy Strategy
Ukrainian President Volodymyr Zelensky hailed the cessation of gas transit as a significant defeat for Moscow. Writing on Telegram, he urged increased US gas supplies to Europe to end lingering energy dependence on Russia. The European Commission affirmed that the EU is well-prepared, having bolstered LNG import capacity since 2022.
Economic Consequences for Russia and Ukraine
Ukraine stands to lose up to $1 billion annually in transit fees but has raised gas transmission tariffs for domestic consumers to offset the losses. Meanwhile, Gazprom faces an estimated $5 billion loss in gas sales, further impacting Russia’s energy revenues.
Decline of Russian Gas Exports to Europe
In 2018, Russian pipeline routes delivered a record 201 billion cubic meters (bcm) of gas to Europe. By 2023, this figure plummeted to just 15 bcm via Ukraine, following the destruction of the Nord Stream pipeline and the closure of the Yamal-Europe route.
This halt in Russian gas transit signals a historic shift in Europe’s energy landscape, with the EU focusing on diversified and secure energy sources for the future.
