In a press release, Moscow and Kyiv announced that the agreement which had bound them for 5 years had not been renewed, embarrassing part of Europe.
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The supply of Russian gas to European Union countries via Ukraine ended on January 1, 2025. The Ukrainian gas transit operator GTSOU indicated that Gazprom had stopped the flow of gas coming from Russia, via Ukrainian gas pipelines.
The move marks the end of a five-year deal signed in 2019 between the two warring countries, which allowed liquefied natural gas (LNG) exports from Moscow to the continent to transit through Ukraine before being rerouted to their destination final.
The deal was very lucrative, bringing billions to the Kremlin in revenue and to Kyiv in transit fees.
Ukrainian President Volodymyr Zelensky announced that he did not intend to renew the agreement. He stressed that his decision was important to allow Europe to turn the page on Russia and to prevent the Kremlin from “earn extra billions” on Ukrainian blood.
The closure of Russia's oldest gas route to Europe ends a decade of tumultuous relations with the continent, which began as early as 2014 with Moscow's annexation of the Crimean peninsula.
The European Union has stepped up efforts to reduce its dependence on Russian energy since the invasion of Ukraine in February 2022. figures published by Brussels indicate that Russian gas accounted for around 8% of total EU gas imports in 2023. In contrast, this figure rose to over 40% in 2021.
The bloc has sought alternative energy sources in Qatar and the United States. The change was clearly effective as Gazprom posted a loss of $7 billion (€6.73 billion) for the first time in two and a half decades.
Although Brussels has significantly reduced its imports of Russian gas, a number of eastern EU member states are still largely dependent on it.
Countries like Austria and Slovakia continue to massively import Russian gas, which represents around 5 billion euros in annual revenue for Moscow.
Vienna says no supply disruption is expected as it has diversified its sources, importing LNG via Italy and Germany, and has built up a good reserve, making the decision in December to terminate its long-term contract with Gazprom.
The situation is more complex for Slovakia which also prepared and did not report a deficit, but Bratislava now has to pay additional transit costs for alternative routes, since gas will now be imported from the west rather than from the east. In response, Slovakia also threatened Kyiv with stopping electricity supplies to Ukraine.
Other European countries, not members of the EU, are also expected to suffer. Moldova, once part of the Soviet Union, should suffer serious losses. The country has not yet been able to renew its agreement with Gazprom and has not positioned itself to use other means of supply.
Impacts of the expiry of the agreement on Europe
Despite the European Union's preparation and efforts to replace Russian gas, Europe has felt the effects of rising energy costs, which has affected the continent's industrial competitiveness compared to Western competition from states -United and Eastern China.
Many countries have experienced an economic downturn, while inflation rates have soared, further worsening the cost of living crisis.
Ukraine is expected to lose around 1 billion euros in annual transit fees, a drop in the ocean compared to the 5 billion euros Gazprom is expected to lose in revenue from the deal.
ADVERTISEMENTPlans for the future
The European Union's executive body, the European Commission, published plans in December to help its member states and guide them in the process of completely replacing Russian gas.
In a reportBrussels has defined several emergency measures to help affected countries. This includes meeting needs by supplying Greek, Turkish and Romanian gas via the trans-Balkan route.
Norwegian gas is also an option which can be transported through Poland, while Germany can also contribute to gas distribution in Central Europe.
This plan is logistically difficult because it requires bypassing systems that have been in place for decades.
ADVERTISEMENTRussia, for example, has been transporting gas to Europe via Ukraine since 1991. At its peak, Moscow accounted for around 35% of the European gas market.
