Russia Halts Gas Exports to Europe via Ukraine as Transit Deal Expires

MOSCOW: On New Year’s Day, Russian natural gas exports to Europe via Ukraine came to a halt after the expiration of a five-year transit agreement between Russia’s Gazprom and Ukraine. The shutdown marks a significant turning point in energy relations between Russia, Ukraine, and Europe, signaling the end of a gas route that has been a key supplier of energy to Europe for decades.

Ukraine’s Energy Minister, German Galushchenko, called the cessation of gas transit a “historic event,” noting that Russia is now losing access to critical markets and will suffer financial losses. “Europe has already made the decision to abandon Russian gas,” he added. The decision to halt gas flow was expected, given the ongoing war between Russia and Ukraine, which began in February 2022. Ukraine had previously made it clear that it would not extend the transit deal amid the conflict.

This disruption impacts significant gas flows to Europe. Historically, the route through Ukraine accounted for about half of Russia’s gas exports to the continent. However, in the wake of the conflict, Russia has diversified its exports, continuing to send gas to Europe via the TurkStream pipeline, which runs across the Black Sea. This pipeline serves markets such as Hungary and Serbia.

In response to the war, the European Union has ramped up efforts to reduce its reliance on Russian energy, turning to alternative sources and securing new suppliers. Countries like Slovakia and Austria, who still depended on Russian gas via Ukraine, have already arranged alternative supplies. Moldova, a former Soviet republic, is one of the most affected nations, with the government stating that it will need to reduce its gas consumption by a third.

Ukraine’s energy ministry emphasized that the suspension of Russian gas transit was also a measure of national security, aligning with its broader strategy to sever energy ties with Russia amid the ongoing war. The shutdown is expected to cost Ukraine around $800 million in lost transit fees, while Gazprom will forgo approximately $5 billion in gas revenue.

The expiration of the transit deal follows a series of significant changes in European gas routes. The Yamal-Europe pipeline through Belarus has also been shut down, and the Nord Stream pipeline across the Baltic Sea was damaged in 2022. At its peak in 2018, Russian gas exports to Europe reached a record 201 billion cubic meters, but by 2023, this had dropped significantly to just 15 bcm via Ukraine.

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The halt of Russian gas exports via Ukraine marks the end of an era for Europe’s energy landscape, as the continent accelerates its efforts to move away from Russian energy dependency.