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 | getty images
Ukraine halted the flow of Russian gas to several European countries on New Year’s Day, ending Moscow’s decades-long dominance of Europe’s energy markets.
Russia’s state-owned energy giant Gazprom Confirmed 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 side willing to make a new deal in the meantime. 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 up the possibility of earning additional billions on our blood.”
Russia, which has delivered gas to Europe via Ukrainian pipelines since 1991, says supply changes would hurt EU countries the most. Moscow can still send gas through the TurkStream pipeline, which connects Russia with Hungary, Serbia and Türkiye.
According to it, Ukraine will lose up to $1 billion per year in transit fees from Russia due to the blockade reuters While Gazprom is likely to lose about $5 billion in gas sales.
The European Commission, the executive branch of the European Union, Said It was working with EU member states most affected by the end of the gas transit agreement to ensure the entire 27-nation bloc was prepared for such a scenario.
slovakia Austria and Moldova are among the countries most at risk from the disruption. They were most dependent on transit volumes of Russian gas in 2023, according to Rystad Energy That year Slovakia imported about 3.2 billion cubic metres, Austria received 5.7 billion cubic metres, and Moldova 2 billion cubic metres.
In this pool photo distributed by Russian state agency Sputnik, Russia’s President Vladimir Putin (right) shakes hands with Slovakia’s Prime Minister Robert Fico (left) before their talks in Moscow on December 22, 2024.
Gavriil Grigorov AFP | getty images
Austria has insisted it is well prepared for the stoppage, but others were more concerned.
Slovakia’s Prime Minister Robert Fico warned that terminating Ukraine’s gas transit agreement could lead to “Harsh“Influence on the EU, without harming Russia.
Fico also threatened to cut off electricity supplies to neighboring Ukraine. The Prime Minister is a vocal critic of the EU’s support for Ukraine in the current war. made a surprise visit to moscow For talks with Russian President Vladimir Putin just before Christmas.
Moldova, which is not a member of the European Union, declared A 60-day state of emergency was imposed last month due to energy security concerns.
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. Will allow to do.
‘A historical event’
Ukrainian Energy Minister Herman Galushchenko It has been told The cessation of the flow of Russian gas through Ukraine is a “historic event”.
“Russia is losing markets, it will suffer financial losses,” Galushchenko said via Telegram on January 1, according to Google Translate.
“Europe has already decided to abandon Russian gas. And European initiatives reinvigorate the european union This provides what Ukraine has done today,” he added.
Separately, Polish Foreign Minister Radek Sikorski Welcome The development was hailed as a political victory, with Russia’s Putin accused of trying to “blackmail Eastern Europe with the threat of cutting off gas supplies”.
Steam clouds from the OMV refinery plant rise into the morning sky in Schwechat, Austria, a suburb of Vienna, on November 18, 2024.
Joe Clammer | AFP | getty images
The latest data compiled by industry group Gas Infrastructure Europe shows The EU’s gas storage facilities are about 73% full. In Germany, Europe’s largest economy and biggest gas consumer, inventories currently stand at about 80%.
“Without gas transit from Azerbaijan or any other third party following the swap agreement with Russia, the EU will need about 7.2 (billion cubic metres) of gas from the LNG market,” said Christoph Helser, gas and LNG analyst at Rystad Energy. ” Said in a research note.
“Terminals in Poland, Germany, Lithuania and Italy can send these volumes to the worst-affected counties such as Slovakia and Austria.”
Europe’s energy security
Henning Gloystein, practice head of the energy, climate and resources team at Eurasia Group, said Ukraine’s decision to block the flow of Russian gas to the EU is not a surprise, as both Kiev and Moscow have long said they Will not be willing to renew an agreement. In the present war circumstances.
In a research note, Gloystein said the termination of the deal poses no threat to the EU’s winter energy security, given the measures taken by EU importers to cut supplies and prepare for the mild winter weather seen across much of Europe. The steps taken have been cited.
The front-month gas price at the Dutch TTF hub, the European benchmark for natural gas trading, was last seen Thursday up 1.2% at 49.49 euros ($51.1) per megawatt-hour. New York’s Intercontinental Exchange,
Eurasia Group’s Gloystein said gas price fluctuations in the coming months will likely depend on political developments in the Russia-Ukraine war and the state of the remaining winter weather.
“On the political front, talks are underway in some EU members (for example Slovakia, where many of Ukraine’s pipelines enter the EU), Russia and Ukraine to find an agreement that would allow some resumption of supplies. However, there was no progress in the negotiations at the end of the year,” Gloystein said.
On the weather front, temperatures are currently expected to remain above average for the rest of Europe’s winter, meaning the impact of the cuts will be limited,” he said.
