Russia's Gas Transit to Europe via Ukraine to Cease

The transit of Russian gas to Europe through the pipeline that passes through Ukraine will be halted on January 1, 2025, ending Russia's long-standing dominance in supplying gas to Europe. The pipeline, which is the oldest route for Russian gas to Europe, dates back to the Soviet Union era. The last contract between Moscow and Kyiv for gas transit through this route was extended five years ago, and its expiration date is the last day of December, Tuesday, January 1. The Ukrainian gas transmission company announced on Tuesday that Russia has not requested to continue gas transit through this pipeline. Following Moscow's military invasion of Ukraine in March 2022, the European Union significantly reduced its dependence on Russian gas. For this reason, experts predict that the cessation of gas transit through Ukraine will not have a significant impact on the European energy market. Despite sanctions, the European Union increased its gas purchases from Russia. The natural gas price index in European markets on Tuesday was 48.5 euros per megawatt-hour, showing no significant change compared to previous days. However, from a geopolitical perspective, the cessation of Russian gas exports through Ukraine is of greater importance. Since the beginning of the military invasion of Ukraine about three years ago, Russia's share in supplying Europe's gas needs has significantly decreased compared to the USA, Qatar, and Norway. On the other hand, the sharp decline in gas imports from Russia has played a significant role in slowing economic growth, increasing inflation rates, and the cost of living for people in most European countries. Despite rapid actions by European countries to secure gas from other countries, the impact of reduced cheap gas imports from Russia on the economic challenges of major countries like Germany cannot be denied. Gas exports to Europe began during the Soviet era and increased in the last two decades. Before the military invasion of Ukraine, Russia supplied about 35% of Europe's gas needs. In the past three years, most of the gas transit pipelines from Russia to Europe, including the Belarus pipeline, have been shut down, and the Nord Stream pipeline, which reached northern Germany via the Baltic Sea, was blown up. The Soviet-era pipeline transports gas extracted in the Siberian region to the city of Sudzha, located in the Kursk region of western Russia, which is now under the control of the Ukrainian army. This pipeline passes through Ukraine to Slovakia, where it splits into two branches, one leading to the Czech Republic and the other to Austria. Apparently, the Ukrainian government has not been willing to negotiate the extension of the gas transit contract through its pipeline. With the termination of this contract, Ukraine will lose about $800 million in transit fees annually, and Russian gas company Gazprom's revenue from gas sales to Europe will also decrease by about $5 billion. Statistics show that in 2023, Russia exported about 15 billion cubic meters of gas to Europe through the Ukrainian pipeline, equivalent to eight percent of its gas exports to Europe during its peak in 2018 and 2019 through multiple pipelines. The cessation of gas transit through Ukraine will create serious problems for Moldova, which was previously part of the Soviet Union. Hungary and several other Eastern and Central European countries still receive Russian gas exports through the TurkStream pipeline, which crosses the Black Sea, although Hungary preferred that gas transit through Ukraine continue.