Some countries now need to rethink their gas supply, as the gas market changes.
The supply freeze has triggered an electricity supply crisis in Moldova. The country is almost entirely dependent on Russian gas.
Pierre Crom / Getty
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It survived the Cold War, then the collapse of the Soviet Union and even the Maidan Square revolution and subsequent Russian invasion: Russian gas flowed through Ukraine to Europe for almost 50 years without interruption.
But that came to an end on Jan. 1, 2025.
Why is gas no longer flowing through Ukraine?
The Ukrainian state-owned company Naftogaz has not extended an expiring transit contract with the Russian gas supplier Gazprom. The Ukrainian government said it wanted to damage Putin’s war chest. According to estimates, the Russian state budget will lose annual revenue of over $5 billion as a result of the newly imposed transit ban. However, Ukraine also made money from the transit agreement: After deducting the costs of maintaining the pipeline, Russian gas is said to have earned the country $100 to $200 million a year.
What does the transit stop mean for Europe?
The transit route recently supplied just under 5% of total gas imports to the EU. However, individual countries were heavily dependent on Russian gas from the pipeline.
Which countries are most affected?
In Moldova, the breakaway region of Transnistria is almost entirely dependent on Russian gas. In the rest of Moldova the supply freeze has triggered a electricity supply crisis, because almost 80% of Moldova’s electricity comes from a gas-fired power plant that was operated with Russian gas. In the short term, Moldova wants to alleviate the bottleneck by generating electricity from coal. To this end, the country wants to import electricity from Romania and gas from Bulgaria, which is likely to mean higher energy prices for Moldova.
By the end of 2024, Slovakia was sourcing almost two thirds of its total gas imports via the transit route. The Slovakian government has taken precautions in recent months. in November, the energy supplier SPP concluded a gas agreement with the Azerbaijani state energy group SOCAR. Gas that was previously stored in Germany is now also flowing into Slovakia via the Czech Republic and Poland. However, the volumes supplied are likely to be more expensive for Slovakia than the gas previously purchased from Russia.
Robert Fico is annoyed. He would have liked to continue receiving Russian gas.
AP
As a result, Slovakian Prime Minister Robert Fico has accused the Ukrainian government of causing an economic crisis in Slovakia and throughout Europe by blocking the gas supply through the transit route. In return, said Fico, Slovakia would no longer supply Ukraine with electricity – a threat that has not yet had any impact on the flow of electricity between the two countries in the first few days of the new year. Fico also announced that his government would review support for Ukrainian refugees.
Until a few weeks ago, Austria also imported large quantities of Russian natural gas via the transit route. However, Vienna came to terms with the new situation some time ago. Gazprom stopped its deliveries to the Austrian energy company OMV back in November due to a legal dispute .
In contrast to the politicians in Slovakia, hardly anyone in Austria demanded that Ukraine continue to allow Russian gas imports. Austria’s gas storage facilities are well stocked and the country also receives gas supplies from Germany and Italy.
A large percentage of Hungary’s gas supply also comes from Russia, but it receives most of it via the Turk Stream pipeline, which runs through the Black Sea. Alongside the Blue Stream, this is now the last remaining pipeline connection through which Russian gas continues to flow to Europe.
How much Russian gas is still coming to Europe?
Much less than before the Russian invasion of Ukraine. In 2021, almost half the gas in Europe still came from Russia. In 2024, the EU’s total share of Russian gas imports fluctuated between 15 and 20%. The supply routes have shifted: Russian pipeline gas has declined, but trade in liquefied natural gas (LNG) from Russia will reach a new high in 2024.
The EU has set itself a non-binding target of doing without Russian gas completely by 2027.
What does the elimination of the transit route mean for Switzerland?
Switzerland procures its gas primarily from Germany, the Netherlands, France and Italy – all countries that do not purchase gas from the transit route. However, this does not mean that Switzerland can manage without Russian gas. France, in particular is a major importer of Russian LNG and passes on quantities of it to Switzerland.
What does Russia say about the transit ban?
The Russian energy company Gazprom wrote succinctly in a press release that it would not be allowed to continue supplying gas via Ukraine. Vladimir Putin last commented on the topic in December. He described the impending transit stop as historic, but said Russia and the gas company would survive the event: «We will cope – and Gazprom will cope too.»
What does the EU say?
At the turn of the year, the European Commission expressed its conviction that it would be able to cope with the elimination of the transit route. It emphasized three factors: Gas consumption in the member states had fallen since the outbreak of the war in Ukraine. In addition, the member states have expanded their import capacities for LNG, and accumulated gas reserves.
Will Europe have to freeze this winter?
Gas supplies appear to be secure for this winter. If consumption remains similar to previous winters, storage facilities could cover the entire demand of the EU countries for two to three months without additional supplies.
What happens after that?
In the spring and summer, Europeans will begin to fill their stores for the coming winter. It will then become clear how they intend to replace the missing gas from the transit route.
It seems clear that the EU will turn to trading partners other than Russia – such as the U.S., where Donald Trump has already announced that he will boost the domestic gas industry during his presidency. The lower the European gas storage levels are in spring, the more eager Europeans are likely to look for new suppliers – and thus boost the price of gas.
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Publish date : 2025-01-09 03:52:00
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