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January 1, 2025 marks a decisive milestone in energy relations between Russia, Ukraine and Europe. The halt to Russian gas exports via Ukrainian pipelines ends a decades-old transit agreement and reshuffles the cards in the European energy market.
A historic agreement that ends
At midnight local time, Russian gas exports through Ukraine ceased, as a result of the expiration of the transit agreement between Moscow and kyiv. This agreement, which was signed for a period of five years, was not renewed due to persistent political and military tensions between the two countries. Since 2022, Ukraine has clearly announced its refusal to extend this agreement.
The shutdown marks the end of one of the oldest Russian gas transit routes to Europe, established during Soviet times. According to Gazprom, around 15 billion cubic meters of gas were transported via Ukraine in 2023, compared to 65 billion in 2020, reflecting the gradual decline in volumes over the years.
The financial consequences for Russia and Ukraine
The economic impact of this interruption is significant:
- For Ukraine: the country loses about $800 million a year in revenue from transit fees paid by Russia.
- Pour Gazprom : the Russian company suffers an estimated loss of $5 billion in gas sales to Europe via Ukraine.
This ruling also represents a strategic loss for Gazprom, which has seen its market share in the European Union fall drastically since the start of the conflict in 2022.
The European response: alternatives already in place
The European Commission, which had anticipated this situation, is minimizing the impact of this interruption. Thanks to intensified efforts since 2022, Europe has reduced its dependence on Russian gas:
- Reinforced infrastructure: liquefied natural gas (LNG) terminals have been developed, increasing import capabilities from countries such as the United States and Qatar.
- Diversification of sources: supplies from Norway, Algeria and Azerbaijan were intensified.
- Strategic storage: gas reserves in the European Union are more than 90% full, ensuring energy security for the winter.
Countries like Austria and Slovakia, traditionally dependent on Russian gas, have also diversified their sources of supply.
The consequences for European consumers
Despite European efforts, some countries continue to feel the impact of this interruption:
- Moldova: the country, which is heavily dependent on Russian gas, will have to reduce its consumption by a third.
- Austria: although prepared, it still depends on flows via other European countries to secure its needs.
The road transport sector, previously dependent on Russian imports, welcomes the measures put in place, although there remain concerns about long-term price stability.
A restructuring of the energy market
The cessation of flows via Ukraine is part of a broader trend of reduction in Russian exports to Europe. In 2018, Russia transported 201 billion cubic meters of gas to Europe. In 2023, this volume was reduced to 15 billion via Ukraine.
Other major routes, such as Nord Stream and Yamal-Europe, were closed, ending Russian hegemony in the European gas market.
An energy future redefined
With the gradual abandonment of Russian hydrocarbons, Europe is committing more towards renewable energy sources and energy sobriety strategies.
This turning point could mark a lasting weakening of Russia’s energy influence, while accelerating the European energy transition.
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