Despite nearly three years of war, Russian energy continues to pass unhindered through Ukrainian territory every day to date, and on New Year's Day the water taps were firmly closed.
Today, for the first time in decades, Russian gas is being supplied to European customers through Ukrainian pipelines at zero cost, with confirmation that there was no last-minute agreement to keep this route, and energy prices on Tuesday skyrocketed. Billions of cubic feet of gas have been transported along this route since the end of the Cold War, and the five-year contract between Moscow and Kiev that governs gas transport surprisingly remained in place until just before it expired in 2016. continued to be Midnight.
However, no new contract has been signed, and Ukraine announced today in its state media that it had “suspended the transportation of Russian natural gas within its territory in the interest of national security.” The country's energy minister said: “We have blocked Russian gas shipments. This is a historic event. Russia is losing markets and will suffer economic losses.”
Russia ignored its role in the invasion of Ukraine and placed all the blame on Kiev for blocking energy shipments to Europe, saying today: “We have repeatedly and clearly made it clear that Ukraine will extend these agreements. Because of its refusal, Gazprom was deprived of its technical and legal capacity to supply gas for transit through Ukraine from January 1, 2025. Russian gas supplies for transit through Ukraine stopped at 8 a.m. Moscow time. ”
surelyaccording to to The Times, If the pipeline is shut down, Russia stands to lose $5 billion a year in gas sales, assuming no alternative transport route or market is found for the product, as Russia has already done recently..
But Ukraine faces losses of its own, losing an $800 million annual cut to transport Russian gas to European Union customers. This will almost certainly be compensated by Ukraine's financial backers.
Perhaps most missed are the few major customers of relatively cheap Russian energy in central Europe. Before the war, Russian gas was Europe's main source of supply, but with the beginning of the conflict and the loss of the Nord Stream pipe most energy shocks were experienced and it has now been replaced by LNG imports. This keeps the lights on, but at great cost to European industry and consumers, with energy bills soaring to historic highs.
For the few Central European countries without sea access and easy access to LNG imports, cheap and plentiful Russian gas remained an important, even dominant, energy source even during the war. The European Union has moved to reassure these countries that they can get gas from elsewhere through the continent's pipeline network, and said this could be achieved through LNG imports.
Hungary and Slovakia have lost both a major source of gas and government fees for transit to other euro members, but in theory at least they have enough gas stored to get them through the winter. The challenge is to maintain the maximum amount of these reserves, which will become even more expensive in the future.
Slovakia's Prime Minister Roberto Fico was ridiculed in most European capitals for being too friendly with Russia, and in 2024 was shot dead by a political activist for not wanting to involve Slovakia in the Ukraine war. He even threatened to take action against Ukraine for refusing to tolerate it. Future gas transportation. Last month, he threatened to cut Slovakia's electricity exports to Ukraine in retaliation, saying the loss of Russian gas through Ukraine would cost European countries tens of billions of dollars in energy costs.
Ukraine has become increasingly reliant on electricity imports from neighboring countries as the war drags on and military action erodes the country's domestic power generation capacity. As reported, Ukraine's electricity imports from Slovakia increased by 150 percent in 2203.
The Ukraine route accounted for about half of Russia's gas imports to Europe by the end of 2024. Now that the route is closed, the last remaining route is the Turkish Stream, which passes through Turkey and enters southeastern Europe. In 2025, Russia's gas exports to Europe will be about 8% of the level before the war with Ukraine.
