A Gazprom pipe in Domodedovo, outside Moscow, Russia, 20 July 2023. Photo: EPA-EFE/MAXIM SHIPENKOV
Both the Ukrainian government and Russian energy giant Gazprom announced that the company’s natural gas exports to Europe via Ukrainian pipelines had come to an end on Wednesday after a five-year transit deal between the countries expired at midnight.
Once Europe’s largest supplier of gas, Russia’s European customers have increasingly sought out alternative suppliers in the US, Norway and Qatar since the invasion of Ukraine in 2022.
“We stopped the transit of Russian gas. This is a historic event,” Ukrainian Energy Minister Herman Halushchenko said on Wednesday, adding: “Russia is losing its markets, it will suffer financial losses. Europe has already made the decision to abandon Russian gas.”
While Ukraine stopped buying Russian gas in 2015, a year after the illegal Russia annexation of Crimea, it continued to allow pipelines across its territory to be used as a transit route for the export of Russian gas to other countries in Europe.
Tom Marzec-Manser, an independent gas market analyst, told The Guardian that the end of the transit deal closed “a major gas artery connecting Russia’s gas reserves to Europe and could mean that eastern European countries will import more gas from northwestern European markets.”
Ukraine may be able to meet its own gas demands via fossil fuel production and storage, The Guardian said, but the International Energy Agency has warned a cold winter could see the country increasingly dependent on imports from the EU.
“The last two winters have been very mild,” Marzec-Manser continued. “So this is the first time since the recent weaponisation of gas in Europe that we’re facing the kind of conditions which could stress-test the gas market.”
Russia will still supply gas to countries such as Hungary and Serbia via the TurkStream pipeline, which runs under the Black Sea.
Slovakian Prime Minister Robert Fico, seen as the Kremlin’s main EU ally alongside Hungary’s Prime Minister Viktor Orbán, has threatened to cut backup electricity supplies to Ukraine unless Kyiv negotiates a new agreement with Gazprom, but Ukrainian President Volodymyr Zelensky has repeatedly stressed the importance of ending the deal and depriving the Kremlin of a significant revenue stream.
While Ukraine will lose about $800 million (€770 million) a year in transit fees from Russia, Gazprom will lose close to $5 billion (€4.8 billion) in gas sales to Europe. Gazprom posted a loss of $7 billion (€6.7 billion) in 2023, its first in more than 20 years.
