Page 42 - bne IntelliNews magazine February 2025

42 I Eastern Europe bne February 2025
As of the start of 2025 the transit of Russian gas to Europe via Ukraine ended putting more pressure on the EU to power its economy and cutting €1bn off Kyiv’s income. / bne IntelliNews
Russian gas transit through Ukraine ends, with Europe meeting the new year with 5% less gas
Newsbase
Transit of Russian natural gas through Ukraine ended in the early hours of January 1, depriving the EU of about 5% of its gas supply, after last-hope efforts led by Slovakia to ensure continued flow failed.
Ukraine has served as a critical route for Europe’s gas supply for many decades. Flow through Russia’s oldest pipeline route to Europe has now ended.
Expectations had been growing through late 2024 that Russia and Ukraine would not extend their five-year gas transit deal beyond the end of last
year, as Kyiv had repeatedly insisted it would not agree to an extension and EU
www.bne.eu
authorities, which played a critical role in brokering the previous agreement, ruled out an extension as unnecessary. These expectations stoked a growth in gas prices over the last few months.
When it became increasingly clear that the deal would not be renewed, gas prices surged in the final days of 2024, with the front-month TTF contract closing the year at €48.9 per MWh ($542 per 1,000 cubic metres).
Ukraine transited 14bn cubic metres of Russian gas to the EU in 2023, which was roughly the same as 5% of its overall gas consumption that year. In such a tight energy market, this will cause Europe
pain, but considerably less than the pain it suffered when Russia dramatically cut supply in 2022 after its invasion of Ukraine, in a failed attempt to force concessions from Ukraine’s European allies. Prior to the war, Russia supplied more than a third of the continent’s gas.
Only losers
Everyone loses from the halt in gas transit. Russia’s national gas champion Gazprom will lose around $5bn in revenue, having already suffered its first annual loss in decades in 2023 as
a result of Moscow’s weaponisation
of gas supply. Gazprom now faces an existential crisis. It no longer makes the Kremlin much money, and is unlikely to