Ukraine has blocked Russian gas from reaching Europe. Here’s who is most at risk

The natural gas-fired Mitte combined heat and power (CHP) plant, operated by Vattenfall AB, in Berlin, Germany, on Wednesday, January 1, 2025.

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Ukraine halted the flow of Russian gas to several European countries on New Year’s Day, putting an end to Moscow’s decades-long dominance of European energy markets.

Russian state-owned energy giant Gazprom certain Gas exports to Europe via Ukraine stopped at around 8am local time (5am London time) on Wednesday.

The widely expected move marks the end of a five-year transit agreement between Russia and Ukraine, with neither party willing to reach a new agreement amid the crisis. The ongoing war.

Ukrainian President Volodymyr Zelensky said last month that Kiev was not prepared to prolong the transit of Russian gas, adding: “We will not give the possibility of earning additional billions with our blood.”

Russia, which has been transporting gas to Europe via Ukrainian pipelines since 1991, says that European Union countries will suffer more than others from the shift in supplies. Moscow can still send gas via the TurkStream pipeline, which connects Russia to Hungary, Serbia and Turkey.

Ukraine will lose up to $1 billion annually in transit fees from Russia due to the stop ReutersWhile Gazprom is on track to lose nearly $5 billion in gas sales.

The European Commission, the executive arm of the European Union, He said It has been working with the EU member states most affected by the end of the gas transit agreement to ensure the entire 27-nation bloc is prepared for such a scenario.

SlovakiaAnd Austria and Moldova Among the countries most at risk from discontinuation. These European countries were the most dependent on Russian gas transit quantities in 2023, according to Reuters. Rystad EnergySlovakia imported approximately 3.2 billion cubic meters that year, Austria imported 5.7 billion cubic meters, and Moldova received 2 billion cubic meters.

In this photo collage distributed by Russian state agency Sputnik, Russian President Vladimir Putin (right) shakes hands with Slovak Prime Minister Robert Fico (left) before their talks in Moscow on December 22, 2024.

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Austria insisted it was well prepared to stop, but others were more concerned.

Slovak Prime Minister Robert Fico warned that Ukraine’s termination of the gas transportation agreement would have serious consequences.radicalInfluencing the European Union without harming Russia. Fico also threatened to cut off electricity supplies to neighboring Ukraine.

Prime Minister, A Voice critic EU support for Ukraine in the ongoing war He made a surprise visit to Moscow For talks with Russian President Vladimir Putin shortly before Christmas.

Moldova, which is not a member of the European Union, Announce A 60-day state of emergency was declared last month due to concerns about energy security.

A total of 56 lawmakers in Moldova’s 101-seat parliament voted in favor of a nationwide state of emergency, which the government said at the time would allow the country to implement a series of measures to prevent and mitigate the risk of insufficient energy resources.

“historical event”

Ukrainian Energy Minister Herman Galushenko described Stopping the flow of Russian gas through Ukraine as a “historic event.”

“Russia is losing markets, and will suffer financial losses,” Galoshenko said via Telegram on January 1, according to a Google translation.

“Europe has already decided to abandon Russian gas. And the European initiative Re-empowering the European Union He added: “It states exactly what Ukraine did today.”

Separately, Polish Foreign Minister Radek Sikorski praised He described this development as a political victory, accusing Russian President Putin of trying to “blackmail Eastern Europe by threatening to cut off gas supplies.”

Clouds of steam from an OMV refinery rise into the morning sky in the city of Schwechat on the outskirts of Vienna, Austria on November 18, 2024.

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The latest data compiled by industry group Gas Infrastructure Europe He appears EU gas storage facilities are approximately 73% full. In Germany, the largest economy in Europe and the largest consumer of gas, reserves currently stand at approximately 80%.

Christoph Halser, gas and LNG analyst at Rystad Energy, said: “Without Azerbaijan or another third party transporting gas after a swap deal with Russia, the EU would need to source around 7.2 (billion cubic metres) of gas from the LNG market.” “. he said in a research note.

“Termins in Poland, Germany, Lithuania and Italy can send these quantities to the most affected countries, such as Slovakia and Austria.”

Energy security in Europe

Henning Glosten, head of the Eurasia Group’s energy, climate and resources team, said Ukraine’s decision to halt Russian gas flows to the EU is not surprising given that Kiev and Moscow have long said they would not be willing to renew the deal. Under the current war conditions.

In a research note, Gloystein said the expiration of the deal does not threaten winter energy security in the European Union, citing steps taken by EU importers to prepare for reduced supplies and mild winter weather experienced in much of Europe.

Mizuho: Natural gas is the most volatile commodity asset

Eurasia Group’s Glosten said that gas price movements over the coming months are likely to depend on political developments in the Russia-Ukraine war and remaining winter weather conditions.

“On the political front, there are ongoing talks between some EU members (such as Slovakia, where several Ukrainian pipelines enter the EU), Russia and Ukraine to find a compromise that might allow some resumption of supplies. However, there have been no “There was no progress during the negotiations at the beginning of the year.”

“On the weather front, forecasts currently indicate above-average temperatures during the rest of the winter in Europe, which means the impact of the reductions will be limited,” he added.