Ukraine Cuts Off Russian Gas Flow to Europe, Marking a Historic Shift

Ukraine has fulfilled its pledge to cease the transit of Russian gas to Europe via its territory following the expiration of a critical agreement with Moscow on Wednesday.

This anticipated yet symbolic decision marks a significant moment amidst nearly three years of Ukraine’s full-scale conflict with Russia. The move aligns with Europe’s substantial reduction of Russian gas imports and reflects Ukraine’s prioritization of national security.

This is a historic event. We have halted the transit of Russian gas, Ukraine’s energy ministry announced in a statement, emphasizing that preparations for the cessation had been made well in advance of the agreement’s expiration.

Last year, Kremlin-owned gas giant Gazprom, which signed the 2019 transit deal with Ukraine’s Naftogaz, reported a $6.9 billion loss—its first in over 20 years—attributed to declining sales to Europe, Reuters reported, despite efforts to increase exports to China.

Ukraine, in turn, stands to lose approximately $800 million annually in transit fees from Russia, while Gazprom faces a nearly $5 billion drop in gas sales, according to the news agency. Many European countries that previously relied on Russian gas had already secured alternative supply routes, Reuters noted.

The expired agreement accounted for roughly 5% of the European Union’s total gas imports, primarily serving Austria, Hungary, and Slovakia, according to the Brussels-based think tank Bruegel. With its expiration, Europe now receives Russian pipeline gas exclusively via the TurkStream pipeline, which passes through Turkey and extends to Bulgaria, Serbia, and Hungary.

Henning Gloystein, head of Energy, Climate & Resources at Eurasia Group, said the expiration of the deal was no surprise but anticipated a rise in spot gas prices when markets reopen on Thursday.

However, he noted that a major price spike like those seen during earlier Russian supply cuts is unlikely, as EU importers have long prepared for this scenario, citing the region's mild start to winter.

The European Union has spent over a year coordinating with member states to mitigate the impact of the deal’s expiration, a European Commission spokeswoman told CNN. The European gas infrastructure is flexible enough to supply gas of non-Russian origin to central and eastern Europe via alternative routes, she explained, highlighting the significant expansion of liquefied natural gas (LNG) import capacity since 2022.

Austria’s Energy Minister, Leonore Gewessler, echoed this preparedness, stating on X early Wednesday that Austria had done its homework, with energy firms securing non-Russian suppliers.

In contrast, Slovakia’s Prime Minister Robert Fico warned that the halt of Russian gas flows through Ukraine would have a drastic impact on the European Union, though not on Russia, according to a Reuters report. Fico has previously claimed that the deal’s end could drive up gas and electricity prices across Europe, Reuters noted.

Before Russia’s full-scale invasion of Ukraine in 2022, it was the European Union’s largest supplier of natural gas. However, the EU has reduced Russia’s share of its pipeline gas imports from over 40% in 2021 to about 8% in 2023, according to the European Council.

To bridge the gap, Europe has significantly increased imports of liquefied natural gas (LNG)—a chilled, transportable form of natural gas—from the United States and other countries, along with pipeline gas from Norway. While the EU has also boosted imports of Russian LNG to meet energy demands, it remains committed to phasing out all Russian fossil fuels by 2027.

Analysts told CNN last month that nations previously reliant on Russian gas through the Ukraine transit deal are unlikely to face energy shortages. They are expected to compensate by importing additional LNG or natural gas via pipelines from other European suppliers.

Still, Massimo Di Odoardo, senior natural gas researcher at energy data firm Wood Mackenzie, cautioned in late December that the deal’s expiry could complicate Europe’s efforts to replenish gas reserves before next winter. This, he suggested, could keep gas prices near current levels or push them higher in 2025.

While prices have fallen sharply from their record highs in summer 2022, they remain more than double their historical averages.

Signs of strain are already emerging. Reuters reported on Wednesday that Transdniestria, a breakaway region of Moldova—a non-EU country reliant on Russian gas via Ukraine—had reduced heating and hot water supplies to households following the transit deal's expiration.