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“One of Moscow’s Biggest Defeats”: Zelensky As Ukraine Ends Europe’s Supply Of Russian Gas. Who Does It Benefit If At All?
Ukrainian President Volodymyr Zelensky has declared the cessation of Russian gas transit through Ukraine as “one of Moscow’s biggest defeats.”
The move, a culmination of escalating tensions between the two nations, signifies a critical moment in the geopolitical energy arena. On social media, Zelensky accused Moscow of weaponizing energy and engaging in “cynical energy blackmail” against its partners. He also expressed hope that the United States would step in to strengthen Europe’s gas supply.
The End of an Era
The transit of Russian gas through Ukraine has long been a cornerstone of Europe’s energy supply. When Vladimir Putin assumed power over 25 years ago, over 130 billion cubic meters of gas flowed annually through Ukraine to Europe. As of January 1, 2025, that number has dropped to zero.
This halt comes after Ukraine refused to renegotiate its transit deal with Russia, effectively ending a decades-long dependency.
The five-year transit agreement between Russia’s Gazprom and Ukraine’s Naftogaz expired on December 31, 2024. Ukraine’s energy ministry justified the decision, citing “national security interests,” and hailed it as a “historic event.” While the move aligns with Europe’s broader strategy to reduce reliance on Russian energy, it also introduces new challenges for both Ukraine and Europe.
Winners and Losers
Ukraine: While Ukraine has succeeded in severing a critical economic tie with its aggressor, it stands to lose approximately $800 million annually in transit fees. Yet, the decision greatly shows Kyiv’s resolve to weaken Russia’s war chest, but it also places additional economic strain on a nation already struggling with the fallout of a protracted war.
Russia: For Russia, the financial implications are severe. Gazprom, the Kremlin-controlled energy giant, recorded a $6.9 billion loss last year due to declining sales to Europe. The cessation of gas transit through Ukraine further compounds these losses, slashing an estimated $5 billion in annual revenue.
While Russia has pivoted to China as an alternative market, the financial and logistical hurdles are considerable.
Europe: The European Union’s reliance on Russian gas has been waning, but the end of the Ukraine transit deal eliminates yet another supply route. This leaves the Turkstream pipeline, which runs through Turkey and serves countries like Bulgaria, Serbia, and Hungary, as the sole conduit for Russian gas into Europe. Although alternative arrangements have been made, the abrupt change is likely to cause a spike in spot gas prices, particularly in Eastern Europe.
The Ripple Effect
Transnistria, a breakaway region in Moldova, has already reported disruptions, including cuts to heating and hot water supplies suggesting the immediate humanitarian impact on vulnerable regions still reliant on Russian gas.
Henning Gloystein, head of Energy, Climate & Resources at Eurasia Group, notes that the deal’s expiration was “no surprise,” but anticipates significant market volatility. Spot gas prices are expected to surge, potentially increasing Europe’s ongoing energy crisis.
The European Union has been collaborating with countries for over a year to prepare for the potential expiration of the gas transit deal, a spokeswoman for the European Commission stated.
“The European gas infrastructure is flexible enough to supply gas from non-Russian sources to Central and Eastern Europe via alternative routes,” the spokeswoman said. “Since 2022, it has been bolstered by significant new liquefied natural gas (LNG) import capacities.”
Austria’s Energy Minister Leonore Gewessler echoed this sentiment in a statement on X early Wednesday, stating, “We did our homework and were well prepared for this scenario.” She added that Austrian energy firms had actively secured new, non-Russian suppliers.
However, Slovakia’s Prime Minister Robert Fico warned on Wednesday that the cessation of Russian gas flows via Ukraine would have a “drastic” impact on the EU, though not on Russia, according to a report. Fico has previously argued that the end of the deal would result in higher gas and electricity prices across Europe.
How Much Gas Was Russia Exporting to Europe?
Many European countries began reducing their dependence on Russian gas following Moscow’s invasion of Ukraine in February 2022. At its peak, Russia accounted for 35% of Europe’s gas imports, but this share has since fallen to approximately 8%.
The gas was transported through the Soviet-era Urengoy-Pomary-Uzhgorod pipeline, originating in Siberia and passing through Sudzha, a town in Russia’s Kursk region now under Ukrainian military control. From there, the gas moved via Ukraine into Slovakia, where the pipeline splits into branches supplying the Czech Republic and Austria.
Will There Be an Electricity Shortage? Who Will Be Affected?
Austria, Slovakia, and Moldova have been dependent on the transit route for their power supply.
Austria received the majority of its gas from Russia via Ukraine, while Slovakia relied on approximately 3 billion cubic meters (bcm) annually through this route, which accounted for about two-thirds of its total demand. Austrian energy regulator E-Control has assured that the country is prepared for a switch in supply and does not anticipate disruptions.
In contrast, Slovak Prime Minister Robert Fico warned that the halt in supply would cost the Eastern European nation hundreds of millions of dollars in lost transit revenue and higher fees for importing alternative gas. Fico stated that this would likely drive up gas prices across Europe.
Slovakia’s economy ministry estimated the additional cost at 177 million euros ($184 million) for securing gas via alternative routes.
Moldova appears to be the most vulnerable. Russia had been supplying around 2 bcm of gas annually via Ukraine to Moldova’s pro-Russia breakaway region of Transnistria since 2022. Transnistria, which borders Ukraine, used Russian gas to generate electricity that was then sold to government-controlled parts of Moldova. On Wednesday, Transnistria, home to 450,000 people, cut off heating and hot water supplies to households.
Moldova has already declared a state of emergency in anticipation of a gas shortage. President Maia Sandu blamed Gazprom for failing to consider alternative routes, warning that this winter could be “harsh” without Russian gas. However, Prime Minister Dorin Recean noted that Moldova has diversified its sources of gas supply.
Meanwhile, Ukraine itself does not rely on Russian transit gas, according to the European Commission, which also emphasized that the bloc had prepared for the cut-off.
Has Russian Gas Flow to Europe Completely Stopped?
The pipeline passing through Ukraine was one of the last operational routes for exporting Russian gas to Europe. Other pipelines, including the Yamal-Europe pipeline through Belarus and the Nord Stream pipeline under the Baltic Sea supplying Germany, were shut down following the onset of the Ukraine war in 2022.
Russia continues to use the TurkStream pipeline, which runs along the Black Sea’s bed, to export gas. This pipeline has two lines: one supplies the domestic market in Turkey, while the other delivers gas to central European customers, including Hungary and Serbia. However, the TurkStream’s total annual capacity is limited to 31.5 billion cubic meters (bcm) for both lines combined.
What Does This Mean for Europe?
Before the full-scale invasion of Ukraine in 2022, Russia was the European Union’s largest natural gas supplier. The EU has since reduced Russia’s share of its pipeline gas imports from over 40% in 2021 to about 8% in 2023, according to the European Council.
To compensate for the shortfall, Europe has significantly increased imports of liquefied natural gas (LNG) — a chilled and transportable form of natural gas — from the United States and other countries. Additionally, pipeline gas from Norway and Qatar has supplemented the supply.
“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 LNG import capacities since 2022,” said Anna-Kaisa Itkonen, a spokesperson for the European Commission.
While the EU has boosted imports of Russian LNG to meet its energy needs, it aims to phase out all Russian fossil fuels by 2027, adhering to a self-imposed deadline.
Analysts stated that countries previously receiving Russian gas via the Ukraine transit deal are unlikely to face energy shortages. These nations are expected to offset the loss by increasing LNG imports or securing more natural gas from other European countries.
Still, challenges remain. Massimo Di Odoardo, a senior natural gas researcher at energy data firm Wood Mackenzie, noted that the expiration of the Ukraine transit deal could make it more difficult for Europe to replenish its gas reserves ahead of the next winter. As a result, European gas prices are likely to remain elevated and could even rise further in 2025.
Gas prices have dropped significantly from their record highs in the summer of 2022 but remain over twice their historical average. With the closure of Russia’s oldest gas route to Europe, which had been operational for over four decades, Russia’s share of European gas imports has plummeted to less than 10%. Despite this, a pipeline running through Turkiye continues to supply gas to countries like Hungary.
How Will the Shutdown Impact Eastern Europe During Winter?
The cessation of Russian gas supplies via Ukraine comes at a critical time, raising concerns about its impact, especially in Eastern Europe.
Slovakia’s major energy supplier, SPP, stated on Wednesday that it is prepared for the transition and plans to meet its customers’ needs through alternative routes, primarily sourcing gas from Germany and Hungary. However, the company acknowledged that this shift would incur additional costs due to higher transit fees.
Austria’s energy regulator, E-Control, outlined Slovakia’s potential sources for gas: about one-third could be supplied from Hungary, another third from Austria, with the rest coming from the Czech Republic and Poland. The Czech Republic has also confirmed its readiness to support Slovakia with gas transit and storage capacities.
In Moldova, Transnistria’s energy firm Energocom announced on Tuesday that the country could cover 38% of its energy needs through domestic production, including 10% from renewable sources. To bridge the gap, Moldova plans to import the remaining 62% of its energy requirements from neighboring Romania.
These adjustments while amply showcase the resilience of European countries in diversifying their energy supplies it also however illustrates the financial and logistical challenges posed by the sudden halt of Russian gas transit.
The Last Bit
The end of Russian gas transit through Ukraine marks a significant shift in the global energy order. For Ukraine, it is a symbolic victory and a step towards energy independence. For Russia, it represents a major economic setback and a narrowing of its geopolitical influence in Europe. For Europe, it is a reminder of the fragile balance between energy security and political solidarity.
As Europe looks to the United States and other partners to fill the gap, who truly benefits from this dramatic reordering of energy alliances? The answer, it seems, will unfold in the months to come.