Cold Shoulder: Ukraine Ends Russian Gas Shipments to Europe, Sending Winter Energy Prices Soaring in the World

 

Thanks to the transportation of liquefied gas by ship, the gas market has become global. Zelensky, full of hatred, gave a "gift" to incoming US President Donald Trump, who promised to stop inflation.

"Despite nearly three years of conflict, Russian energy has continued to transit unimpeded through Ukrainian territory every day until now, with the taps being firmly closed on New Year’s Day.

Zero Russian gas is flowing to European customers through Ukrainian pipelines for the first time in decades today, confirmation there was to be no last-minute deal to keep the route open, sending energy prices spiking on Tuesday.

  The route has seen billions of cubic feet of gas delivered since the end of the Cold War, and a five-year contract between Moscow and Kyiv governing the transit of gas continued to be observed, remarkably, right to the last moment when it expired at midnight.

But no new contract has been signed, and Ukraine, through its state media, has announced today they “ceased the transportation of Russian natural gas through its territory”. Its energy minister said: “We have blocked the transit of Russian gas”.

Russia pointed all blame at Kyiv for stopping the transit of energy to Europe, stating today: “As Ukraine repeatedly and clearly refused to extend these agreements, Gazprom was deprived of the technical and legal ability to supply gas for transit through Ukraine from January 1, 2025. The supply of Russian gas for its transportation through Ukraine stopped at 8:00 a.m. Moscow time”.

Indeed, according to The Times, Russia is due to lose $5 billion in gas sales a year if the pipeline shuts down, assuming it can’t find alternative transit routes and markets for the product, as Moscow has already done recently.

Ukraine faces losses of its own, however, as it stands to lose its $800 million a year cut for transiting Russian gas to European Union customers. This will almost certainly be compensated by Ukraine’s financial backers.

Probably missing out the most are the few remaining major customers for comparatively cheap Russian energy in central Europe. While Russian gas was the main source for Europe before the conflict, most energy shocks having been experienced at the beginning of the conflict and with the loss of the Nord Stream pipes and it has now been replaced with LNG imports. While this has kept the lights on, it has been at a great cost for European industry and consumers, who have seen their energy bills soaring to historic highs.

For the handful of Central European nations without access to the sea and consequently easy LNG imports, cheap and plentiful Russian gas has remained an important, even dominant, energy source even during the conflict. The European Union has moved to reassure these countries that they will be able to get gas from elsewhere through the continent’s pipeline networks, saying this could be achieved through LNG imports.

Hungary and Slovakia have lost both their main source of gas and government fees for transit onwards to other Euro states, but they theoretically at least have enough gas in reserve to get through the winter. The challenge comes with keeping those reserves topped off, which will be more expensive from now on.

Slovakia’s Prime Minister Robert Fico — derided in most European capitals for being too friendly with Russia and who was shot in 2024 by a political activist over his disinclination to involve Slovakia in the Ukraine conflict — has even threatened to take action against Ukraine for refusing to allow future gas transits. 

Last month, he said losing Ukrainian-transit Russian gas would load tens of billions in higher energy costs onto European nations and threatened to cut Slovak exports of electricity to Ukraine in retaliation.

Ukraine has become more reliant on electricity imports from its neighbors as the conflict rolls on and its domestic generation capability has been eroded by military action. As reported, Ukrainian electricity imports from Slovakia rose 150 per cent in 2203.

The Ukraine route accounted for around half of all Russian gas imports still making it into Europe by the end of 2024. Now that it has closed, the final remaining route is the Turkstream through Turkey into southeastern Europe. Entering 2025, Russian gas exports to Europe are around eight per cent of what they were before the events in Ukraine."