Information
The termination of the Ukraine-Russia gas transit agreement marks a significant shift in Europe’s energy landscape. Despite three years of war, gas flowed through Ukraine, but Gazprom halted supplies on January 1, 2025, after Ukraine refused to renew the contract. Ukrainian President Volodymyr Zelenskyy called it a defeat for Moscow and urged the U.S. to increase LNG supplies to Europe, emphasising the need to end European energy dependence on Russia. Historically, Russia dominated Europe’s gas market, supplying up to 35% at its peak. However, by 2023, Russian pipeline gas through Ukraine accounted for less than 10% of EU imports, with countries like Austria and Hungary remaining reliant. The halt will cost Gazprom $5 billion annually and Ukraine $1 billion in transit fees, raising concerns for landlocked eastern EU nations heavily dependent on Russian gas.
The EU, however, appears prepared for the disruption, having diversified energy sources and reduced gas consumption by 18% since 2022. LNG from the U.S. and other suppliers has reduced reliance on Russian imports, which dropped to 15% of EU gas consumption by 2023. While Western European countries remain confident, Eastern Europe faces challenges. Hungary’s Prime Minister Viktor Orban seeks creative solutions to maintain gas flows, while Slovakia has threatened countermeasures against Ukraine, exposing regional tensions. Despite these pressures, the EU Commission projects minimal impact on gas prices and asserts it is well-equipped to handle the transition, underscoring a broader effort to minimise Russian influence in Europe’s energy market.
Source: AFP, dpa
So what
This seems like a logical move despite protests from Hungary and Slovakia. Regardless, both countries will likely be able to maintain gas supplies from other sources. Additionally, though this will likely hurt Russia’s finances, the impact will be minimal as it is still selling gas to other markets such as India and China. But it is possible that Russia could suffer a death by a thousand cuts.
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