Europe could see a ‘drastic’ rise to energy costs as Russian natural gas exports via Soviet-era pipelines running through Ukraine were halted on New Year’s Day.
The move comes as a transit deal expired while warring Moscow and Kyiv have failed to reach an agreement to continue the flows.
The shutdown of Russia’s oldest gas route to Europe ends a decade of fraught relations sparked by Russia’s seizure of Crimea in 2014. Ukraine stopped buying Russian gas the following year.
‘We stopped the transit of Russian gas. This is a historic event. Russia is losing its markets, it will suffer financial losses. Europe has already made the decision to abandon Russian gas,’ Ukraine’s Energy Minister German Galushchenko said in a statement.
The stoppage of gas transit through Ukraine will have ‘drastic’ impact on European Union countries but not on Russia, Slovak Prime Minister Robert Fico said on Wednesday.
The pro-Russian Slovak leader has repeatedly warned that the end of transit would cost Slovakia hundreds of millions of euros in lost transit revenue and higher fees for the import of other gas, and argued it would also lead to a rise in gas and electricity prices in Europe.
The stoppage of gas flows was expected amid the war, which started in February 2022.
Ukraine has been adamant it would not extend the deal amid the military conflict.
Europe could see a ‘drastic’ rise to energy costs as Russian natural gas exports via Soviet-era pipelines running through Ukraine were halted on New Year’s Day
The move comes as a transit deal expired while warring Moscow and Kyiv have failed to reach an agreement to continue the flows
This photograph taken on April 22, 2015 shows a part of a gas installation at a gas-pumping station on the gas pipeline in the small town Boyarka in the Kiev region
According to an industry source, Gazprom last year assumed the absence of the gas transit via Ukraine, which accounted for roughly a half of Russia’s total pipeline gas exports to Europe.
Russia still exports gas via the TurkStream pipeline on the bed of the Black Sea.
TurkStream has two lines – one for the Turkish domestic market and the other supplying central European customers including Hungary and Serbia.
The European Union redoubled its efforts to reduce its dependence on Russian energy after the outbreak of the military conflict in Ukraine in 2022 by seeking alternative sources.
The remaining buyers of Russian gas via Ukraine such as Slovakia and Austria have also arranged alternative supply.
Moldova, once part of the Soviet Union, is among the countries worst affected. It says it will now need to introduce measures to reduce its gas use by a third.
There were no immediate comments from Europe in the early hours of Wednesday.
The five-year gas transit deal between Russia and Ukraine expired early on Jan. 1.
‘Due to the repeated and clearly expressed refusal of the Ukrainian side to renew these agreements, Gazprom was deprived of the technical and legal ability to supply gas for transit through the territory of Ukraine from January 1, 2025,’ Gazprom said in a statement on the Telegram messaging app.
The stoppage of gas flows was expected amid the war, which started in February 2022
‘Starting from 08:00 Moscow time (0500 GMT), the supply of Russian gas for its transportation through the territory of Ukraine is not carried out.’
Ukraine’s energy ministry also said the transportation of Russian gas through Ukraine ‘has been stopped in the interests of national security’.
Ukraine now faces the loss of some $800 million a year in transit fees from Russia, while Gazprom will lose close to $5 billion in gas sales.
Russia and the former Soviet Union spent half a century building up a major share of the European gas market, which at its peak stood at around 35%, but the war has all but destroyed that business for Gazprom.
The Yamal-Europe pipeline via Belarus has also shut and the Nord Stream route across the Baltic Sea to Germany was blown up in 2022.
Combined, the various routes delivered a record high 201 billion cubic metres (bcm) of gas to Europe in 2018.
Russia shipped about 15 bcm of gas via Ukraine in 2023, down from 65 bcm when the last five-year contract began in 2020.
It comes amid fears that Putin could sabotage a key North Sea pipeline and cause winter blackouts in Britain.
The concerns come as the RAF was put on alert last month and follow recent incidents in the Baltic which have seen ships controlled by Russia or its allies linked with damage to subsea infrastructure and suspected of spying.
Security officials are worried that the next target could be pipelines that transport about 42 per cent of Britain’s entire gas supply.
Were such an attack to occur, the impact would be devastating and could translate to winter blackouts in Britain along with numerous other tangible impacts on the island’s inhabitants.
The fears come as two Baltic pipelines to date have been severed by explosions, one in 2022 and another last year with concerns that similar damage could also be maintained in the North Sea.
Gassco, the Norwegian state-owned company that owns the pipelines running to Britain, said: ‘Incidents such as the explosions in Nord Stream 1 and Nord Stream 2 in 2022 and the Baltic Connector incident in 2023 are not linked to Norwegian gas infrastructure, but nevertheless resulted in a need for increased vigilance.
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Publish date : 2025-01-01 02:23:00
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