On January 1, 2025, a historic shift took place in European energy politics- Ukraine officially ceased the transit of Russian natural gas to Europe. The Ukrainian authorities ruled out any chance of extending the agreement, signed in 2019 between Gazprom and Naftogaz Ukrainy, which expired on December 31, 2024. This move marked the end of decades of reliance on Soviet-era pipelines, and symbolized a major step towards Europe’s energy independence from Russia. The pipeline running through Ukraine, constructed to transport Siberian gas to European markets, was Russia’s most significant gas link to Europe after the Nord Stream pipeline to Germany was sabotaged in 2022—potentially by Ukraine—and the route through Belarus to Poland was shut down.
The cessation of Russian gas flowing through Ukraine is both a consequence of the ongoing war between Russia and Ukraine and a milestone in Europe’s ongoing transition away from Russian fossil fuels. “We won’t allow them [Russians] to earn additional billions off our blood,” President Zelenskyy said in December 2024. Meanwhile, Russia’s Foreign Ministry was more direct in advancing a long-standing Russian conspiracy theory: that the U.S. had orchestrated the entire situation at the expense of both Europe and Russia. Based on this, our blog delves into the causes and consequences of this pivotal development.
Cause: National Security and Sovereignty
Ukraine’s decision to halt gas transit came after a key agreement with Russia expired on December 31, 2024. In a statement, Ukrainian Energy Minister German Galushchenko explained that the decision was taken “in the interests of national security.” Given the ongoing war with Russia, which invaded Ukraine in 2022, Ukraine has sought to distance itself from any agreements or infrastructure that could be exploited for political leverage by Moscow. For years, Russia has been accused of using its gas supplies as a geopolitical tool to exert pressure on Europe, and Ukraine has said it no longer wishes to participate in this process, particularly as it involves enriching Russia while Ukraine suffers from its invasion.
Cause: Europe’s Growing Energy Independence from Russia
The decision to cut the gas flow comes after years of Europe’s efforts to reduce its dependency on Russian energy. In 2023, Russian gas accounted for only 8% of Europe’s natural gas imports, a significant drop from over 40% in 2021, before Russia’s full-scale invasion of Ukraine. To replace Russian gas, the EU has turned to alternative sources, such as liquefied natural gas (LNG) imports from the U.S. and Qatar, as well as gas from Norway. Furthermore, the destruction of the Nord Stream pipeline in 2022, and the shutting down of other key Russian pipeline routes, have made it increasingly impractical for Europe to rely on Russian gas. Therefore, Europe’s decreased reliance on Russian resources strongly encouraged Ukraine to take this crucial step.
Cause: Financial Motivation and Loss of Transit Revenue
Ukraine’s decision also carries economic weight. The country will lose up to $1 billion annually in transit fees from Russian gas. However, this loss is deemed acceptable in light of the national security benefits. Additionally, Ukraine has increased domestic gas tariffs for consumers, attempting to offset some of the financial losses. While Ukraine’s economic pain is real, the government prioritizes its sovereignty over maintaining revenue from Russia’s gas transit. In addition, the cessation of gas transit does not directly affect Ukraine’s energy security, as the Russian gas passing through Ukrainian territory is not used within the Ukrainian market.
Cause: Political Symbolism and Strategic Messaging
The decision to end the gas flow is not only practical but symbolic. Ukrainian President Volodymyr Zelenskyy has called this move “one of Moscow’s biggest defeats,” framing it as part of the broader struggle to weaken Russian influence in Europe. For Ukraine, this is an opportunity to sever one of Russia’s key mechanisms of political manipulation and ensure that Europe does not remain complicit in Russia’s war effort, even indirectly.
Consequence: Impact on Energy Supplies to Europe
Ukraine’s decision to stop the flow of Russian gas will have a limited immediate effect on Europe’s energy supply. The gas transported via Ukraine represents only about 5% of the EU’s total gas imports, and much of this has already been replaced by alternative supply routes, including pipeline gas from Norway, LNG from the U.S., and the TurkStream pipeline under the Black Sea. However, analysts have warned that the cessation could cause a brief spike in European spot gas prices, although a repeat of the chaotic price surges seen in 2022 is unlikely. EU member states have been preparing for this scenario for over a year; still, the disruption highlights Europe’s vulnerability to energy crises, particularly during colder months when demand is higher.
Consequence: Possible impact on Ukraine
Aside from the economic loses mentioned above, Ukraine’s decision risks weakening its strategic position as an energy partner for Europe, including its role in providing gas storage. Furthermore, Ukraine’s gas infrastructure, which remains largely intact for now, could become a military target if Russian gas is no longer flowing through its pipelines.
Consequence: Energy Shortages in Moldova’s Breakaway Region
While Europe as a whole seems prepared for the gas cut-off, neighboring Moldova faces a more immediate crisis. The breakaway region of Transnistria, which has long relied on Russian gas flowing through Ukraine, gas which also powers the MGRES power plant supplying the majority of Moldova’s electricity, has already reported power and heating outages. Further, the Moldovan government has accused Russia of using energy blackmail, threatening to stop supplies if the transit deal is not renewed. While Moldova can rely on gas imports from Romania, the situation in Transnistria remains dire, affecting hundreds of thousands of residents.
Consequence: Strain on Russia’s Gas Revenues
For Russia, the cessation of gas transit via Ukraine is a significant financial blow. Gazprom, Russia’s state-owned energy giant, is expected to lose around $5 billion in revenue from gas exports to Europe, exacerbating its economic woes. Gazprom’s revenue from European gas sales has already diminished substantially in recent years, as Europe diversifies its sources and invests in cleaner energy alternatives. This loss also underscores Russia’s diminishing leverage over Europe, particularly as its invasion of Ukraine continues to alienate former customers.
Consequence: Political Fallout in Europe
While some European nations, particularly those in Central and Eastern Europe, have welcomed the end of Russian gas transit, the move has sparked political controversy. It is important to note that Austria, which was dependent on Russian gas through the Ukrainian transit route, was better prepared, as it stopped receiving gas deliveries via Ukraine in early 2024 due to the disruption of Russian gas supplies to Europe following the escalation of the war in Ukraine. However, Slovakia and Hungary—countries that still rely on Russian gas, even post-Ukraine war—have voiced concerns over potential price increases and the financial burden placed on their citizens and industries. The share of Russian gas in Hungary’s imports is 47%, and Slovakia’s is almost 90%. Slovakia’s Prime Minister Robert Fico, in particular, has criticized the decision, claiming that it will disproportionately affect EU countries, while Russia will suffer minimal consequences. However, these countries have already been working on diversifying their energy supply and will likely rely on alternative sources to make up for the deficit.
Consequence: A Strategic Blow to Moscow’s Energy Influence
More broadly, Ukraine’s decision represents a further diminishing of Moscow’s ability to use energy as a tool for political leverage. With the European Union’s commitment to ending reliance on Russian fossil fuels by 2027, this decision could accelerate Europe’s transition to cleaner, more diverse energy sources. In the long run, this may result in the weakening of Russia’s dominance in the European energy market, forcing the country to look for new markets or face declining revenue from its energy sector.
Ukraine’s decision to halt the transit of Russian gas to Europe on January 1, 2025, is a transformative move with far-reaching implications for both regional security and global energy politics. This shift, driven by national security concerns, the ongoing war with Russia, and Europe’s broader quest for energy independence, marks a critical step in reducing reliance on Russian fossil fuels and diminishing Moscow’s geopolitical leverage. While the immediate impact on European energy supplies is manageable, with alternative sources already in place, the disruption highlights Europe’s vulnerability and the financial strain on Russia’s energy sector. As Ukraine sacrifices significant transit revenue for the sake of sovereignty, it also strengthens its position within the European energy landscape, aligning with the continent’s efforts to transition to more diverse and sustainable energy sources. In the long term, this decision could accelerate Europe’s decoupling from Russian energy and signal a decline in Russia’s ability to use energy exports as a tool of political coercion, further isolating it on the global stage.
By Mariam Matcharashvili for GFSIS
