Russia’s arrangement to deliver natural gas to Europe via Ukraine has ended after Ukraine refused to extend the agreement, marking the end of Moscow’s decades-long dominance of the European energy market.
Since the collapse of the Soviet Union in 1991, Russian natural gas has been supplied to Europe via pipelines through Ukraine, which not only allows Moscow to earn gas revenues but also allows Kiev to earn transit fees.
A transit contract signed by the two countries’ energy companies in December 2019 expired on Wednesday (January 1), with Kiev choosing not to extend the agreement in the wake of Russia’s 2022 invasion of Ukraine.
Ukrainian Energy Minister Galushenko said the suspension of Russian natural gas transit through Ukraine was a “historic event” and said it would deal a blow to Russia’s finances and its war machine. “Russia is losing its market and it will suffer economic losses.”
Polish Foreign Minister Sikorski on Wednesday hailed the end of the deal as “a new victory for NATO’s expansion to Finland and Sweden.”
It is generally believed that the end of the Russian gas transit arrangement will not affect EU consumer prices. This is different from the outbreak of the Russian-Ukrainian war in 2022, when the decline in Russian supplies led to record prices, exacerbating the cost of living crisis and hitting the EU’s competitiveness.
In 2023, Russian gas accounted for less than 10% of the EU’s gas imports, down from more than 40% before the war.
EU buyers who were buying Russian gas before the transit agreement ended, such as Slovakia and Austria, have arranged alternative supplies. Hungary will continue to receive Russian gas through Turkish pipelines. But Transnistria, a pro-Russian enclave in Moldova, Ukraine’s neighbor, cut off heating and hot water supplies to homes on Wednesday.
A European Commission spokesman said on Tuesday that the EU was prepared for the end of the agreement, saying it would have “limited impact” on the EU’s gas supply security. He said Europe’s gas infrastructure is flexible enough to supply gas from outside Russia to Central and Eastern European countries through alternative routes. The European Commission has been coordinating with member states for more than a year to prepare for alternative supply options.
