Ukraine Halts Russian Gas: Impacts on Europe

On New Year’s Day, Ukraine halted the flow of Russian gas to several European countries, marking the end of a five-year transit agreement amid the ongoing war. Ukrainian President Volodymyr Zelenskyy emphasized that Ukraine would not prolong the transit, stating that continuing would allow Russia to profit from the conflict. This decision may cost Ukraine approximately $1 billion annually in transit fees, while Gazprom could lose nearly $5 billion in gas sales. 

Slovakia, Austria, and Moldova are among the most affected nations, with Slovakia’s Prime Minister warning of “drastic” consequences for the EU and threatening to cut electricity supplies to Ukraine. Moldova, which is not an EU member, declared a 60-day state of emergency due to energy security concerns. 

Ukrainian Energy Minister Herman Galushchenko described the cessation of gas flows as a “historic event,” indicating that Europe is moving away from dependence on Russian gas. The halt comes at a time when EU gas storage facilities are around 73% full, which may alleviate some immediate impacts. 

Experts suggest that the effects of the gas transit stoppage will hinge on political developments and weather conditions during the winter. Preparations by EU member states may help mitigate the impacts of reduced Russian gas supplies in the coming months.

Source: CNBC