Russian gas transit through Ukraine, a consistent supply for nearly fifty years, halted on January 1, 2025, after Ukraine’s Naftogaz opted not to renew its agreement with Gazprom. This decision aims to undermine Putin’s finances amid ongoing conflicts, impacting various European nations differently. While some countries are adapting by seeking alternative gas sources, others face significant energy crises. The EU remains confident in managing the disruption, with plans to reduce reliance on Russian gas by 2027.
Despite enduring the Cold War, the dissolution of the Soviet Union, and the Maidan Revolution, Russian pipeline gas has been a steady flow through Ukraine to Europe for nearly fifty years. This uninterrupted transit came to a halt on January 1, 2025.
Reasons Behind the Cessation of Gas Flow Through Ukraine
The Ukrainian state-owned enterprise Naftogaz chose not to renew its expiring transit agreement with the Russian energy giant Gazprom. The Ukrainian administration indicated that this decision aims to impact Putin’s financial resources amid ongoing conflicts. Estimates suggest that Russia’s state budget is facing a staggering loss of over $5 billion annually due to this halt. Interestingly, Ukraine also benefitted financially from the transit deal, reportedly earning between $100 million and $200 million each year after operational expenses were deducted.
Implications of the Transit Suspension for Europe’s Gas Supply
This transit route previously accounted for nearly 5% of the EU’s total gas imports. However, the significance of Russian gas varies across individual nations, with some being heavily reliant on this supply.
Countries Most Impacted by the Gas Supply Disruption
Transnistria, a breakaway region, finds itself almost entirely dependent on Russian gas. The cessation of supplies has led to an energy crisis, as approximately 80% of its electricity is generated from a gas power plant reliant on Russian gas. In response, Moldova is seeking to alleviate the situation by switching to coal for electricity production and importing energy from Romania and gas from Bulgaria, which could lead to inflated energy costs for its citizens.
Slovakia, which sourced nearly two-thirds of its gas imports through this transit route, has been proactive in addressing the supply gap. In November, the Slovak energy supplier SPP secured a gas agreement with Azerbaijan’s Socar. Additionally, gas is now entering Slovakia from the Czech Republic and Poland, previously stored in Germany. However, costs for these new sources are expected to be higher than the gas previously supplied by Russia.
Slovak Prime Minister Robert Fico criticized the Ukrainian government for instigating an economic crisis in Slovakia and Europe by halting gas supplies. He threatened to stop supplying electricity to Ukraine, although this threat did not impact actual electricity flows initially. Furthermore, Fico announced that his administration would reassess support for Ukrainian refugees.
Austria, which also relied heavily on Russian natural gas via this route, has been adjusting to the new circumstances. Gazprom had already halted deliveries to the Austrian firm OMV in November due to legal disputes. Unlike Slovakia, few in Austria are urging Ukraine to resume gas deliveries, as Austrian gas reserves are well-stocked and they continue to receive supplies from Germany and Italy.
Germany, which previously had a significant share of its gas imports from Russia, now primarily receives its supplies through the Turk Stream pipeline that runs beneath the Black Sea. This pipeline, alongside the Blue Stream, remains the last major connection supplying Russian gas to Europe.
Current Status of Russian Gas Supplies to Europe
Currently, the volume of Russian gas reaching Europe has drastically decreased since the invasion of Ukraine. In 2021, almost half of Europe’s gas was sourced from Russia. By 2024, this share has dwindled to between 15% and 20%. The delivery methods have evolved, with traditional pipeline gas losing prominence, while the trade of liquefied natural gas (LNG) from Russia soared to new heights in 2024.
The EU has set a non-binding target to completely phase out Russian gas by 2027.
Impact of the Transit Route Elimination on Switzerland
Switzerland primarily imports its gas from Germany, the Netherlands, France, and Italy, none of which sourced gas from the now-defunct transit route. Nonetheless, Switzerland cannot completely avoid Russian gas, as France remains a significant importer of Russian LNG, some of which is subsequently supplied to Switzerland.
Russia’s Response to the Transit Suspension
Gazprom has publicly stated that it has been denied the opportunity to continue its gas deliveries through Ukraine. In December, Vladimir Putin characterized the impending suspension as a historic event, asserting that both Russia and Gazprom would endure this challenge, saying, “Okay, we will manage – and Gazprom will manage too.”
EU’s Perspective on the Gas Supply Disruption
The European Commission has expressed confidence in its ability to cope with the cessation of the transit route. They highlighted three key points: a reduction in gas consumption among member states since the onset of the Ukraine conflict, an expansion of LNG import capacities, and increased gas reserves.
Will Europe Face a Winter Without Gas?
This winter, gas supplies appear secure. If consumption patterns mirror those of previous winters, EU storage facilities could satisfy demand for two to three months without additional deliveries.
Looking Ahead: Future Gas Supply Considerations
As spring and summer approach, European nations will begin replenishing their gas reserves for the upcoming winter. It will become crucial to see how they plan to compensate for the deficit created by the elimination of the transit route.
It is evident that EU countries will seek alternative trading partners beyond Russia, including the USA, where there are plans to enhance domestic gas production. The lower the levels of gas storage in Europe by spring, the more urgently countries will pursue new suppliers, potentially driving up gas prices.