Russian natural gas exports via the Soviet-era pipelines running through Ukraine to Europe were halted in the early hours of New Year’s Day. The transit deal expired, and Moscow and Kyiv have been unable to reach a new agreement to continue the flows.
The shutdown of Russia’s oldest gas route to Europe marks the end of a decade-long strained relationship, which began with Russia’s seizure of Crimea in 2014. Ukraine ceased buying Russian gas the following year.
Despite the war between the two countries, Ukrainian President Volodymyr Zelenskiy on Dec 19 said Kyiv might consider allowing the transit of Russian gas if payments to Moscow were withheld until the fighting ends.
Russian President Vladimir Putin a week later said there was no time left this year to sign a new deal.
Russia’s supply to Europe has fallen dramatically in the wake of Moscow’s invasion of Ukraine in Feb. 2022 which spurred the European Union to cut its dependence on Russian gas. Moscow spent half a century building its European gas market share, which at its peak stood at about 35% but has fallen to about 8%.
As of Dec. 1 the EU received less than 14 billion cubic metres (bcm) of gas from Russia via Ukraine, down from 65 bcm/year when the latest five-year contract began in 2020. The European Commission has said that volume can be fully replaced by liquefied natural gas and non-Russian pipeline imports.
Moscow has lost market share to rivals such as Norway, the United States and Qatar. Russia could earn around $5 billion on sales via Ukraine this year based on an average Russian government gas price forecast of $339 per 1,000 cubic metres, Reuters calculations show.
