Ukraine has ended the transit deal of Russian Gas to Europe through its territory. The gas flow was halted on Wednesday, January 1 2025, as it marks the end of the Russian transit contract with Ukraine.
Ukraine’s decision not to renew the transit deal is expected as Europe has already significantly cut down imports of Russian Gas.
Ukraine’s Energy Minister who referred to the halt as a historic event said the deal was ended in the interest of national security.
“Russia is losing its markets, it will suffer financial loss,” the minister added
Russia’s oldest gas supply route to Europe is a pipeline that passed through Ukraine dating back to the days of the Soviet Union. Russia and the Soviet Union spent almost half a century building up major share of the European gas market, but the war in Ukraine has significantly affected the business, reducing Russia’s market share to about 8 percent from 45 percent.
According to Reuters, with this development, Ukraine will now face a loss of $800 million of the transit fee from Russia yearly while Gazprom, the Russian Gas giant that signed the transit deal with Ukraine in 2019 will lose close to $5 billion in gas sales.
Gazprom had last year, recorded for the first time in 20 years $6.9 billion loss as a result of reductions in sales to Europe, Reuters reported.
Meanwhile, some key players in this transit contract have responded to this development.
Head of Energy, Climate & Resources at Eurasia Group, Henning Goldstein, said the deal’s end came as “no surprise” but expects it to trigger a jump in spot gas prices at the reopening of markets on Thursday.
According to him a major price spike witnessed during the previous Russian supply cuts is unlikely to happen, as EU importers have long prepared for this cut.
A spokesperson for the European Commission, while speaking to CNN said, “the European gas infrastructure is flexible enough to provide gas of non-Russian origin to (central and eastern Europe) via alternative routes. It has been reinforced with significant new liquefied natural gas import capacities since 2022,”
“Also, in a statement on X on Wednesday, Austria’s Energy Minister, Leonore Gewessler said, “We did our homework and were well prepared for this scenario.”
She added that the country’s energy firms had sought out new, non-Russian suppliers.
According to Reuter, however, in a somewhat contrary view, Slovakia’s Prime Minister, Robert Fico who had earlier argued that the cut will lead to a higher energy and electricity cost in Europe, said on Wednesday that the end of Russian gas supply via Ukraine will have a “drastic” impact on the EU but not on Russia.
