End of Russian gas era: How halt of transit to impact Europe
Photo: Moscow has finally lost the EU gas market (Getty Images)
On January 1, 2025, gas exports through Soviet-era pipelines running through Ukraine were halted, marking the end of decades of Russian dominance in Europe's energy markets, Reuters reports.
Despite nearly three years of war, gas supplies continued, but Ukraine cut off the transit on January 1 at 7:00 GMT.
However, this halt is not expected to impact consumer prices in the European Union, unlike in 2022, when reductions in Russian gas supplies led to a price surge, exacerbating the cost-of-living crisis and undermining the EU's competitiveness.
The last remaining buyers of Russian gas in the EU via Ukraine, such as Slovakia and Austria, have arranged alternative supplies. Hungary will continue receiving Russian gas through the TurkStream, which runs via two pipelines under the Black Sea.
The break in gas supply also affected the Russian-occupied region of Transnistria in Moldova, which has cut off heating and hot water to households due to its dependency on the same gas transit routes.
The European Commission has stated that the EU had prepared for the cut-off.
"The European gas infrastructure is flexible enough to provide gas of non-Russian origin. It has been reinforced with significant new LNG (liquefied natural gas) import capacities since 2022," Spokesperson for the European Commission said.
Ukraine, which decided not to renew the transit agreement, emphasized that Europe has already made the strategic decision to move away from Russian gas.
"We stopped the transit of Russian gas. This is a historic event. Russia is losing its markets; it will suffer financial losses," Ukraine's Energy Minister German Galushchenko stated.
Cost to both sides
Ukraine will lose around $800 million annually in transit fees, while Gazprom is set to lose about $5 billion in gas sales.
Russia and the former Soviet Union spent half a century building up a significant share of the European gas market, which at its peak was around 35%. Still, the war has all but destroyed Gazprom's business in this area.
The Yamal-Europe pipeline, which runs through Belarus, was also closed, and in 2022, the Nord Stream route across the Baltic Sea to Germany was blown up.
In total, a record amount of gas was delivered to Europe via various routes in 2018 - 201 billion cubic meters. In 2023, Russia delivered around 15 billion cubic meters of gas via Ukraine, which is less than the 65 billion cubic meters when the last five-year contract came into force in 2020.
As reports indicated, Naftogaz's five-year contract with Gazprom expired on January 1, 2025. Ukraine shut off the gas valve on January 1 at 7:00 GMT, depriving Moscow of approximately $5-7 billion in annual revenue.
As Ukraine's Energy Minister German Galushchenko stated, "citizens will not feel this event at all because we will provide gas, and accordingly heat, to the homes of every Ukrainian."
