Shipments of Russian gas to Europe via Ukraine are set to end on New Year’s Day, putting an end to Moscow’s long period of dominance over gas supplies to the European market.
Russia’s oldest gas export route to Europe — a Soviet-era gas pipeline — is scheduled to close at the end of 2024, with the end of a five-year transit agreement between Russia and Ukraine.
Data from Ukraine’s gas transit operator showed on Tuesday that Russia had not requested gas flows for January 1.
The European Union drastically reduced its dependence on Russian gas following the outbreak of war in Ukraine in February 2022 and sought alternative sources of gas.
Remaining buyers of Russian gas, such as Slovakia and Austria, have organized alternative supplies and analysts predict minimal market impact from the shutdown.
Reference gas prices in Europe stood at 48.50 euros per megawatt-hour this Tuesday, just slightly above the opening of negotiations.
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Moscow has lost its dominant share of gas supplies to European Union countries to rivals such as the United States, Qatar and Norway since it invaded Ukraine, prompting the EU to reduce its dependence on Russian gas.
Once the world’s largest gas exporter, state-owned Gazprom reported losses of $7 billion in 2023 alone, its first annual loss since 1999.
For Europe, losing cheap Russian gas supplies has contributed to a major economic slowdown, rising inflation and a worsening cost-of-living crisis.
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Although Europe was able to quickly find alternative energy sources, the loss of Russian gas exacerbated long-term concerns about its declining global competitiveness and especially Germany’s industrial future.
Kiev has refused to negotiate a new gas transit agreement.
Ukraine is giving up $800 million a year in fees from Russia. Gazprom will lose close to 5 billion dollars in gas sales to Europe via Ukraine.
