Russian gas to Europe stops flowing after Ukraine refuses to renew pipeline deal
- The move is expected to have limited impact on the continent, which has diversified its energy supplies since Russia’s full-scale invasion of Ukraine.
Russia halted natural gas flows to Europe via Ukraine, as Kyiv’s refusal to extend a pipeline deal brought an end to one of the last remaining energy links between Russia and what was once its biggest market.
A gas transit deal using Soviet-era pipelines crisscrossing Ukraine expired at the end 2024. Ukraine had said it wouldn’t extend the deal because it was providing revenues that helped Moscow conduct its war in Ukraine. Russian gas exporter Gazprom said it halted flows in the early morning hours of the new year as the deal expired.
“Due to the Ukrainian side’s repeated and explicit refusal to extend these agreements, Gazprom was deprived of the technical and legal opportunity to supply gas for transit," the company said Wednesday.
Ukraine hailed the halt to the flow of Russian gas, saying it would strike a blow against its enemy. “This is a historical event. Russia is losing markets, it will suffer financial losses," Ukraine’s Energy Minister German Galushchenko said.
The end of the deal, brokered by the European Union in 2019, was long expected and will have limited impact on Europe’s gas supplies—unlike earlier in the conflict when Russian gas stoppages upended European gas markets and unleashed a price surge for consumers and factories.
Europe has dramatically reduced its reliance on Russian gas. Moscow used to supply as much as 45% of the EU’s imports before the war, but that share fell to 15% in 2023. Russia still exports pipeline gas to Europe via Turkey, selling to customers such as Hungary and Serbia, and it sends liquefied natural gas via ships. The Ukrainian transit link covered about 5% of the EU’s total imports.
Europe has long prepared for the end of the Ukraine deal, by lowering gas usage and diversifying its suppliers. The EU’s gas demand is 18% lower than in 2022, while storage levels reached over 95% as of Nov. 1.
Throughout the conflict, countries such as Germany rushed to build LNG terminals to receive gas from big producers, including the U.S. and Qatar. EU countries also increased deliveries from Norway, Azerbaijan and Algeria.
According to the EU, in 2023, Norway was the biggest supplier, providing around 30% of the bloc’s gas imports, followed by the U.S. with 19%.
Before the war, Europe provided billions of dollars in revenue to Moscow’s state coffers. In 2023, Gazprom plunged to its first annual loss in more than two decades as European gas supplies reduced.
The end of the Ukraine pipeline deal could deprive Russia of as much as an estimated $6.5 billion in annual revenue, according to the Brussels-based Bruegel think tank. That would be smaller than the financial impact of the previous halts of energy deliveries to Europe.
Ukraine will also lose out on up to $1 billion a year from what it was being paid to allow the transit of gas across its territory.
The Yamal-Europe pipeline via Belarus ended in 2022 amid the war and a dispute over payments between Poland and Russia. The Nord Stream route across the Baltic Sea to Germany was blown up in 2022 in a daring Ukrainian operation, The Wall Street Journal has reported.
Russian President Vladimir Putin “spent billions building Nordstream to circumvent Ukraine and blackmail Eastern Europe with the threat of cutting off gas supplies," Polish Foreign Minister Radek Sikorski said on X Wednesday. “Today Ukraine cut off his ability to export gas direct to the EU."
The EU said on Wednesday that it had expected the Ukraine deal to end and that it was prepared. “The impact of the end of transit via Ukraine on the EU’s security of supply is limited in both volume and scope, affecting only a few countries," the bloc said in a recent report.
The issue has caused tension between Ukraine and some EU countries, especially Hungary and Slovakia, with the countries’ leaders publicly squaring off over the issue.
Slovakia’s prime minister, Robert Fico, visited Putin in Moscow just before Christmas. Hungarian Premier Viktor Orban spoke with the Russian president last month.
After Fico’s visit to Moscow, Ukrainian President Volodymyr Zelensky accused the Slovak leader of seeking to open “a second energy front against Ukraine," by threatening to cut off Ukraine’s emergency electricity imports from the EU.
“Fico’s threats to cut off Ukraine’s emergency power supply this winter while Russia attacks our power plants and energy grid can only be explained by this," Zelensky said.
Austria, which was buying Russian gas via Ukraine, has said it had secured other supplies. “We did our homework and were well prepared for this scenario," Austrian Energy Minister Leonore Gewessler said.
Moldova, which isn’t a member of the EU, is more affected, and officials there have been anticipating shortages.
Write to Georgi Kantchev at georgi.kantchev@wsj.com and Laurence Norman at laurence.norman@wsj.com
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