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The Mitte Combined Heat and Power (CHP) natural gas power plant, operated by Vattenfall AB, in Berlin, Germany, on Wednesday, January 1, 2025.
Bloomberg | Bloomberg | fake images
Ukraine stopped the flow of Russian gas to several European countries on New Year’s Day, ending Moscow’s decades-long dominance over European energy markets.
Russian state energy giant Gazprom confirmed Gas exports to Europe through Ukraine stopped 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 side willing to reach a new agreement amid the ongoing war.
Ukrainian President Volodymyr Zelenskyy said last month that kyiv was unwilling to prolong the transit of Russian gas, adding: “We will not give the chance to earn additional billions with our blood.”
Russia, which has transported gas to Europe via Ukrainian pipelines since 1991, says European Union countries will be hardest hit by the change in supply. Moscow can still ship gas via the TurkStream gas pipeline, which links Russia to Hungary, Serbia and Türkiye.
Ukraine will lose up to $1 billion a year in transit fees from Russia due to strike, says Reuterswhile Gazprom is about to lose nearly $5 billion in gas sales.
The European Commission, the executive arm of the EU, saying had been working with the EU member states most affected by the end of the gas transit deal to ensure the entire 27-nation bloc was prepared for such a scenario.
SlovakiaAustria and Moldova are among the countries most at risk from unemployment. They were the most dependent on Russian gas transit volumes in 2023, according to Rystad EnergySlovakia imported approximately 3.2 billion cubic meters that year, Austria received 5.7 billion cubic meters, and Moldova received 2 billion cubic meters.
In this group photograph distributed by the Russian state agency Sputnik, Russian President Vladimir Putin (right) shakes hands with Slovak Prime Minister Robert Fico (left) before their talks in Moscow on March 22. December 2024.
Gavriil Grigorov | afp | fake images
Austria has insisted it is well prepared for the strike, but others were much more worried.
Slovakia’s Prime Minister Robert Fico warned that Ukraine’s termination of the gas transit agreement would have a “drastic“Impact on the EU, without harming Russia.
Fico also threatened to cut off electricity supplies to neighboring Ukraine. The prime minister, an outspoken critic of the EU’s support for Ukraine in the ongoing war, made a surprise visit to Moscow to talk with Russian President Vladimir Putin shortly before Christmas.
Moldova, which is not a member of the EU, declared a 60-day state of emergency last month over fears 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 threat of insufficient energy resources.
‘A historical fact’
Ukrainian Energy Minister Herman Galushchenko described the cessation of the flow of Russian gas through Ukraine as a “historic event.”
“Russia is losing markets, it will suffer financial losses,” Galushchenko said via Telegram on January 1, according to a Google translation.
“Europe has already decided to abandon Russian gas. And the European initiative Repower the EU reflects exactly what Ukraine has done today,” he added.
On the other hand, the Polish Foreign Minister, Radek Sikorski acclaimed He considered it a political victory and accused Russian President Putin of having tried to “blackmail Eastern Europe with the threat of cutting off gas supplies.”
Clouds of steam from the OMV refinery plant rise into the morning sky over the suburban city of Schwechat, Austria, in Vienna, Nov. 18, 2024.
Joe Klamar | afp | fake images
The latest data compiled by industry group Gas Infrastructure Europe sample EU gas storage facilities are around 73% full. In Germany, Europe’s largest economy and largest consumer of gas, inventories are currently at almost 80%.
“Without Azerbaijan or another third party transiting the gas following a swap deal with Russia, the EU will need around 7.2 (million cubic meters) of gas from the LNG market,” said Christoph Halser, gas and LNG analyst. of Rystad Energy, said in a research note.
“Terminals in Poland, Germany, Lithuania and Italy could send these volumes to the most affected countries, such as Slovakia and Austria.”
Europe’s energy security
Henning Gloystein, head of Eurasia Group’s energy, climate and resources team, said Ukraine’s decision to stop the flow of Russian gas to the EU is not a surprise given that both kyiv and Moscow have long said they would not be willing to renew an agreement. in the current war conditions.
In a research note, Gloystein said the expiration of the deal does not threaten the EU’s winter energy security, citing measures taken by EU importers to prepare for the disruption in supplies and the mild winter weather seen in most of Europe.
The first-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, last rose 1.2% to 49.49 euros ($51.1) per megawatt-hour on Thursday, according New York Intercontinental Exchange.
Eurasia Group’s Gloystein said gas price movements in the coming months would likely 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 (e.g. Slovakia, where many of Ukraine’s pipelines enter the EU), Russia and Ukraine to find a compromise that could allow some resumption of supplies. However, there have been talks. There was no progress during the negotiations towards the end of the year,” Gloystein said.
“On the climate front, above-average temperatures are currently expected for the rest of the European winter, meaning the impact of the cuts will be limited,” he added.
