The flow of Russian gas to several European countries was halted on New Year’s Day after Ukraine refused to renegotiate a transit deal amid war with Moscow.
Ukraine’s unwillingness to renew the five-year-old transit agreement aims to rob Russia of revenue that Moscow can use to fund its war, but the move will likely create an energy crisis in Eastern Europe, with Transnistria – a breakaway Moldovan region – cutting heat and hot water supplies to households.
“It brings to a final end what was once Russia’s dominance of the EU energy market,” Al Jazeera’s Jonah Hull, reporting from Ukraine’s capital Kyiv, said. Before the invasion of Ukraine in 2022, Russia supplied some 35 percent of Europe’s pipeline natural gas exports.
With the shutdown of Russia’s oldest gas route to Europe, functional for more than 40 years, Russia’s share has dwindled to less than 10 percent. Another gas pipeline passing through Turkiye still supplies gas to countries such as Hungary.
So, how will turning off the taps during the height of the winter season affect countries, particularly in Eastern Europe and what could happen next?
Why did Russian gas flow to Europe via Ukraine halted?
Russian energy giant Gazprom said on Wednesday that gas supplies to Europe had been halted at 8am local time (05:00 GMT) after Ukraine’s state-owned oil and gas company Naftogaz refused to renew its latest five-year transit deal.
On Wednesday, Ukraine’s Energy Minister German Galushchenko said in a statement, “We stopped the transit of Russian gas. This is an historic event. Russia is losing its markets, it will suffer financial losses. Europe has already made the decision to abandon Russian gas.”
The latest contract was first signed in 2020 under which Ukraine was paid transport fees. But Ukrainian President Volodymyr Zelenskyy had warned that Kyiv would not renew the transit agreement amid the continuing war.
How much gas was Russia exporting to Europe?
Many European countries began to reduce their reliance on Russian gas after Moscow’s invasion of Ukraine in February 2022.
At its peak, Moscow’s share of European gas imports stood at 35 percent, but has fallen to about 8 percent.
The European Union received less than 14 billion cubic metres (bcm) of gas from Russia through Ukraine as of December 1, down from 65bcm per year when the contract began in 2020.
The gas is sent through the Soviet-era Urengoy-Pomary-Uzhgorod pipeline from Siberia through Sudzha, a town in Russia’s Kursk region which is now under the Ukrainian military’s control. The gas moves via Ukraine into Slovakia. There, the pipeline splits into branches which take the supply to the Czech Republic and Austria.
The transit deal was bringing financial returns for both Russia and Ukraine.
Ukrainian media quoted Serhii Makohon, former head of the Ukrainian GTS Operator, estimating that Russia made a significantly higher amount of money from the transit deal than Ukraine.
Makohon estimated that Russia was earning $5bn a year, a number also reported by the Reuters news agency. On the other hand, Ukraine was receiving an annual $800m “but most of this money is spent on transit itself. [Ukraine’s] treasury receives $100-200m in taxes and dividends,” Makohon was quoted by Ukrainska Pravda.
Bloomberg estimated Russia’s earnings from the deal to be even higher, at $6.5bn annually.
Will there be an electricity shortage? Who will be affected by this?
Austria, Slovakia and Moldova were relying on the transit route for their power supply.
Austria was receiving most of its gas from Russia through Ukraine, while Slovakia was obtaining around 3bcm through the route annually, amounting to approximately two-thirds of its demand.
Austrian energy regulator E-Control has said that it is prepared for a switch in supply and should not face disruptions.
Slovak Prime Minister Robert Fico said on Wednesday that the halt in supply will cost the Eastern European nation hundreds of millions of dollars in transit revenue and a higher fee for the import of other gas.
Fico asserted that this would result in the rise of gas prices across Europe. The Slovak economy ministry said that the country will have to bear the cost worth 177 million euros ($184m) for receiving gas through alternative routes.
Possibly the most vulnerable is Moldova. Russia sent about 2bcm of gas via Ukraine to Moldova’s pro-Russia breakaway region Transnistria annually since 2022. Transnistria, which borders Ukraine, would then sell electricity, generated using Russian gas, to government-controlled parts of Moldova.
Moldova has already declared a state of emergency over the impending gas shortage. Moldova’s President Maia Sandu has blamed Gazprom for not considering an alternative route, and has said this winter in Moldova would be “harsh” without Russian gas.
However, Moldovan Prime Minister Dorin Recean has said that Moldova has diversified sources of gas supply.
On Wednesday, Transnistria, home to 450,000 people, cut off heating and hot water supplies to households.
Ukraine itself does not use Russian transit gas, according to the European Commission, which added that the bloc had prepared for the cut-off.
Has Russian gas flow to Europe completely stopped?
The pipeline passing through Ukraine was one of the last functional routes used to export Russian gas. Other pipelines were shut in the wake of the 2022 Ukraine war, including the Yamal-Europe pipeline through Belarus and the Nord Stream pipeline under the Baltic Sea which sent gas to Germany.
Russia still uses the TurkStream pipeline on the bed of the Black Sea to export gas. The pipeline has two lines, one feeds the domestic market in Turkiye, while the other supplies central European customers including Hungary and Serbia.
However, the TurkStream has limited annual capacity, amounting to 31.5bcm for both lines combined.
What are alternative options for Europe?
Europe has been trying to reduce its reliance on Russian gas, as it bought liquefied natural gas (LNG) from Qatar and the US, alongside piped gas supply from Norway.
“The European gas infrastructure is flexible enough to provide gas of non-Russian origin to Central and Eastern Europe via alternative routes. It has been reinforced with significant new LNG import capacities since 2022,” Anna-Kaisa Itkonen, a spokesperson from the European Commission said.
A large energy supplier in Slovakia, SPP said in a statement on Wednesday that it was prepared for the transition and would supply its customers through alternative routes, mainly from Germany and also Hungary. However, it added that it would face additional costs in transit fees.
According to Austrian energy regulator E-Control, Slovakia could receive gas from Hungary, roughly a third from Austria and the remaining supply from the Czech Republic and Poland. The Czech Republic has also said it can provide Slovakia with gas transit and storage capacities.
Transnistria energy firm Energocom released a statement on Tuesday saying that Moldova could meet 38 percent of its energy needs by domestic production, including 10 percent from renewable energy. Energocom added that Transnistria would import the remaining 62 percent from neighbouring Romania.
https://www.aljazeera.com/news/2025/1/1/russian-gas-flow-to-europe-via-ukraine-stopped-who-does-it-hurt?traffic_source=rss
