Russian Gas Exports To Europe Via Ukraine Stops As Transit Deal Expires

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Russia’s gas company Gazprom reported that it had stopped at 0500 GMT after Ukraine declined to renew a transit deal.

Russian gas exports through Ukraine via Soviet-era pipelines were stopped on New Year’s Day, marking the end of decades of Moscow’s control over Europe‘s energy markets.

Despite almost three years of conflict, the has continued to flow, but Russia’s gas company Gazprom reported that it had stopped at 0500 GMT after Ukraine declined to renew a transit deal.

The much-anticipated halt will not affect the process for European Union (EU) consumers, unlike in 2022, when declining Russian supplies sent prices to an all-time high, worsening a living costs crisis and hitting the bloc’s competitiveness.

Hungary will continue to receive gas through the TurkStream pipeline under the Black Sea, while Slovakia and Austria, the only two EU countries to buy gas through Ukraine, have arranged alternative supplies.

However, early on Wednesday, residents in Transdniestria, a pro-Russian breakaway part of Moldova, Ukraine’s neighbour, also dependent on the transit flows, lost access to hot water and heating.

Tirasteploenergo, the local energy company, advised citizens to use electric heaters, cover their windows and balcony doors with blankets or heavy curtains, and dress warmly.

Ukrainian President Volodymyr Zelenskiy wrote in a post on the Telegram messaging app that the end of gas transit through Ukraine to Europe was one of Moscow’s greatest setbacks and called on the United States to supply more gas to Europe.

He wrote that they would overcome the negative consequences of European dependence on Russian energy faster if they had more energy supplies on the market from Europe’s real partners.

He added that helping the former Soviet state of Moldova through this energy transition was part of Europe’s shared responsibility.

The European Commission stated that the EU was ready for the cut-off of oil supplies.

A commission official states that the European gas infrastructure can adapt and produce non-Russia gas. Since 2022, it has strengthened with significant new LNG (liquefied natural gas) import capabilities.

Russia and the former Soviet Union gained a significant portion of the European gas market over fifty years, reaching a peak of about thirty-five percent.

However, since the Ukraine conflict started, the EU has reduced its dependence on Russian energy by purchasing more LNG from Oatar and the US and piped gas from Norway.

Ukraine said Europe has determined to cease using Russian gas and refused to extend the transit agreement.

Ukrainian Energy Minister German Galushchenko wrote in a statement that Russian gas transit has been stopped, which is a historic occasion since it is losing money and losing its market.

Ukraine will lose up to $1 billion annually in transit costs from Russia as it decided to treble gas transmission charges for domestic consumers to reduce its impact.

It may cost the industry about 1.6 billion hryvnias ($38.2 million) annually. Gazprom will lose close to about $5 billion in gas sales.

Due to a contractual dispute, the company stopped supplying Austria’s OMV in mid-November. In recent weeks, Russian gas flows through Slovakia to Austria at about 200 gigawatt hours (GWh) per day.

On January 1, Austrian energy regulator E-Control claimed that only around 7 GWh per day will flow from Slovakia to Austria.

Slovakia’s primary gas buyer, SPP, announced that it would supply its customers through pipelines from Germany and Hungary, although it would face extra transit costs.

In 2018, combined pipeline routes from Russia supplied a record of 201 billion cubic meters of gas to Europe.

The Nord Stream pipeline route across the Baltic Sea to Germany was destroyed in 2022, and the Yamal-Europe pipeline through Belarus has also shut its operations.

In 2023, Russia exported about 15 billion cubic meters of gas through Ukraine, down from 65 billion cubic meters when the last five-year contract started in 2020.