Russian gas supply to Europe via Ukraine halts as transit deal ends
01 Jan 2025
Russia has been forced to halt gas supplies to Europe as a five-year gas transit deal with Ukraine expired on 1 January 2025 and Kiev refused to extend it any further.
The gas transit deal that was mutually beneficial to both Moscow and Kiev with billions of dollars flowing to the two countries by way of revenue and transit fees, will end on New Year’s Day.
Russia can still export gas to Europe via Turkey. That, however, is a longer route.
Although much of the natural gas coming to European Union is from Russia, Europe now has more flexibility to source gas from the Middle East or elsewhere.
Additionally, LNG supplies of non-Russian origin through alternative routes have helped Europe safeguard its energy economy.
Europe has also been importing liquefied natural gas (LNG) from Qatar and the United States, as also piped gas from Norway.
Europe has been expecting a shut-down of Russian gas supplies amidst differences over Russia’s invasion of Ukraine in 2022, which added to the divide over Russia’s seizure of Crimea in 2014.
The reduction in gas supplies to Europe has had its impact on Russia as well as the state-controlled gas exporter Gazprom recorded a $7 billion loss last year, its first since 1999.
Ukraine now faces an annual loss of some $800 million in transit fees, while Gazprom will lose about $5 billion in revenue
Slovakia will also lose around Euro 177 million ($184 million) in fees for alternative routes, according to its economy ministry. Slovakia and Austria have also arranged for other supply sources.
For Russia, the only buyer for its gas at present is China and it cannot replace the European Union.
The remaining buyers of Russian gas via Ukraine such as Slovakia and Austria have also arranged for alternative supply sources.
