It was an open secret since, a couple of weeks ago, Ukrainian Prime Minister Denys Shmyhal completely ruled out a new agreement with Gazprom to allow Russian gas to continue flowing to the European Union. The confirmation of his words has come this Wednesday, January 1, with the expiration of the contract and the total cut – who knows if definitive – of the gas pipeline that crossed the invaded country from east to west. It was the oldest of all, with five decades behind it, hence its symbolic value.
Although the flow of Russian gas through a Ukraine under Russian siege—one of the great paradoxes of the last three years, with Moscow “earning billions at the expense of our blood,” in the words of Volodymyr Zelensky—has been minimal for some time. months, well below its nominal capacity, the end of supply leaves several certainties and a handful of unknowns to be resolved.
Moldova, the most affected. A nation that is not yet part of the EU is, curiously, the one that is suffering the most from the first consequences of the cut. Although the Moldovan authorities had been discounting this outcome for some time, the search for alternatives has been conspicuous by its absence. Especially in the separatist region of Transnistria, with a pro-Russian majority and where this Wednesday, the first day without gas flow through Ukraine, they are being forced to survive without two basic supplies in winter: “There is no heating or hot water” , a spokeswoman for the local energy company Tirasteploenergo confirmed to Reuters.
The Russian gas company Gazprom has offered to supply gas to Chisinau through other routes outside of Ukraine, but to do so it requires the Moldovan gas company to pay a large arrears debt not recognized by that country. Faced with this new situation, the director general of the International Energy Agency (IEA), Fatih Birol, urged European partners this Wednesday to support Moldova—a nation increasingly polarized between pro-European and pro-Russian—so that it can maintain supply to its population in the middle of winter.
Slovakia and Hungary, forced to look for alternatives.This new situation has raised the first doubts in the two EU countries closest to Vladimir Putin, which are also the ones that received the most gas through the Ukrainian pipeline. Although its situation is much less pressing than that of Moldova, as it has more entry routes for fuel from neighboring countries, the end of the contract has cast some dark clouds on its horizon.
With no access to the sea to directly import liquefied natural gas (LNG, which travels by ship, much more expensive than that which arrives by gas pipeline), the Slovak authorities have confirmed that they will have to face an extra cost of almost 180 million euros in 2025 alone. to supply by other means. Above all, through the gas pipeline that connects it with Germany via the Czech Republic. “There is currently no threat of a gas cut,” Economy Minister Denisa Sakova denied. Critical of kyiv’s “unilateral” decision, however, she has admitted that it will harm her country’s interests.
Hungary, for its part, will redouble imports of Russian gas through Turkey, whose Turkstream gas pipeline, which runs under the Black Sea, is already the only land entry route for Russian gas into the EU. The third country that received significant volumes of Russian gas through Ukraine, Austria, left the equation a month ago, with the end of the contract that united its energy company OMV with Gazprom after a dispute. Like Budapest, Vienna is being forced to import more Russian gas through Türkiye and also from Germany. “It is a great adjustment in gas flows, from east to west,” the number two of the Austrian gas regulator, Markus Krug, has recognized in recent days, which has left the door open to a temporary increase in the rates paid by the consumers.
This new situation in Central Europe could be summarized in one sentence: security of supply will be tense, but far, very far, from the alarms unleashed in the harshest months of the energy crisis. The Ukrainian gas pipeline covered less than 5% of European gas needs, a clearly bearish trend. In 2024, only 13% of European gas imports originated in Russia and—as Henning Gloystein, chief energy analyst at the risk consultancy Eurasia, recalls—European gas demand has fallen by a fifth compared to pre-invasion levels.
Possible retaliation on the Ukrainian electrical system. kyiv’s refusal to renegotiate with the Kremlin the contract that had united them since the end of 2019 has felt particularly bad in Bratislava and Budapest, the two community capitals closest to Moscow. The second has even gone so far as to threaten Ukraine with cuts in electricity exports, vital for a country whose generation and distribution infrastructure has been severely damaged by Russian attacks. The last ones, just a few days ago, in the middle of Christmas.
The challenge posed by the Government of Robert Fico, which just visited its Russian counterpart just a few days ago, has been partially countered by Poland, whose Government has just announced that it will increase its electricity shipments to Ukraine if that country requires it. . This episode clearly illustrates the schism that has been open within the EU for months between clearly pro-European and pro-Ukrainian governments, such as that of Donald Tusk, and others much closer to the Kremlin’s theses. Among them, Hungarian and Slovak.
More LNG, also from Russia. The end of supply through Ukraine does not necessarily mean that the Twenty-seven will import less gas from the Eurasian country. With imports of Russian liquefied gas — especially from the Siberian Yamal Peninsula — at record highs, that entry route is likely to grow further as a replacement. Maritime imports from the three largest LNG exporters on the planet will also grow: the United States, Qatar and Australia, along with Norway, the great economic winners of the invasion initiated by Putin in March 2022.
Rising prices.“While there is no imminent risk to the security of gas supply in the EU, its LNG import needs may increase. And this could strain the market in 2025″, recognized the International Energy Agency hours after the closure of what is known as Ukraine Transit was completed. “Its cessation will probably trigger a rise in prices in Europe, which have ended 2024 at annual highs. However, it is very unlikely that there will be an increase in prices as severe as that seen on previous occasions. [en referencia a 2022]: EU markets and importers have been preparing for this cut for a long time,” Gloystein writes in an express report for clients.
The transfer of pipe to methane tankers, in fact, has been having a dent in prices for some time. Despite there being many fundamental elements for the evolution of the gas market, the cutting of the Ukrainian pipeline has played a relevant role in the recent increase in the price of natural gas in the EU. The Dutch TTF index, which is used as a reference in the Old Continent, has soared by 70% in the course of 2024, with a particularly marked acceleration since the summer. Apart from industry and heating, the two largest vectors of demand, this rise has been directly transferred to the electricity market, where gas plants continue to impose their law despite their much lower use in recent years.
The underground reserves, even more strategic.Semi-unknown to the general publicUntil the outbreak of the energy crisis, Europe had a dense network of underground gas deposits with which to cope with winter peaks in demand. An infrastructure that takes on special value at times like the current one, with community demand close to its annual maximums and with the lock on the penultimate of its Russian gas entry channels by land.
After reaching highs at the end of summer and beginning of autumn, European storage is today at 72% of its capacity, with Spain 10 points above the average, but with France and most Central European countries slightly below. These are healthy levels, in practically all cases, but ones that European authorities closely monitor after consumption in November and much of December was higher than in previous years. Although no one doubts that the current cushion is more than enough to comfortably reach the end of the cold season, the worse tone of the deposits and the recently completed closure of the Ukrainian gas pipeline will force an additional refilling effort next spring.
