Afrasianet - Russian natural gas exports via pipelines from Ukraine to Europe stopped in the early hours of Wednesday, the first day of the new year, after the transit agreement expired and Moscow and Kiev failed to reach an agreement to continue flows.
Over the past few years, Russian gas supplies to Europe have decreased by about 5 times due to sanctions and counter-sanctions, after 3% to 4% of total gas imports to Europe were supplied via Ukraine, while Central and Eastern European countries (Austria, Slovakia, and the Czech Republic) as well as Italy (partially) depend on these supplies.
Repercussions and warnings
One day before the end of 2024, the price of gas in Europe rose to its maximum in 2024 and reached $530 per thousand cubic meters.
Over the past few weeks, fuel prices have risen by 19 percent, or $83. In the German and Austrian markets, gas traded higher at $537.
Slovakian Prime Minister Robert Fiko appealed to the EU Council to support the continued transit of Russian gas to Europe, warning that over the next two years EU countries would pay an additional €120 billion ($124 billion) for gas and electricity if these supplies were interrupted.
According to him, the damage to EU countries will be 30 times greater than Russia's, adding that the losses incurred by Moscow due to Kiev's decision to stop gas transportation will amount to only about two billion euros, which represents only 3% of the total financial losses to the 27 EU member states.
Gazprom supplies Russian gas for transit through the territory of Ukraine in the amount confirmed by the Ukrainian side, which is 37.2 million cubic meters.
The transit line through Ukraine is the only route for Russian gas supplies to Western and Central European countries.
Alternative methods
Economist Viktor Lashon says Russia and Ukraine are unlikely to sign a new gas transport agreement in 2025, estimating the probability of a contract scenario between Moscow and Kiev at just 1 percent.
The question will remain open about how to maintain gas transport from Russia via Ukraine to Europe, but Russia and Europe could theoretically agree on supplies to bypass Ukrainian restrictions so that it would most likely be non-Russian gas in terms of ownership and not belong to Russian companies.
If the gas is legally owned by European companies, Ukraine can allow such supplies, because it in turn wants to maintain crossing points but only by communicating with Europeans, which is in essence an extortion attempt by Kiev.
According to Lashon, this could be done by European companies signing an additional agreement with Gazprom to transfer the gas delivery point to the Russian-Ukrainian border so that the gas actually flows through the territory of Ukraine, provided that it belongs to one country or another, the buyer of Russian gas.
No Warranties
For his part, economic affairs analyst Andrei Zaitsev believes that Russia will lose part of the revenue due to this situation, but will compensate for it thanks to the subsequent rise in gas prices.
If Moscow cannot agree with Europe on a formula for supplying Russian gas that would allow Kiev's restrictions to be bypassed, it will have the option of finding an alternative supply route, for example, through the "Turkish Stream" and then through the so-called Balkan corridor.
But he points out that these hypotheses may not be 100 percent effective or guaranteed taking into account the statements of US President-elect Donald Trump, who has called on Brussels to increase LNG supplies from the US to Europe.
"We should expect at this stage the possibility of Europe's complete rejection of Russian gas, especially since it can only come through roundabout routes," Zaitsev said.
"If European countries refuse to cooperate with Russia in the gas sector, they will become dependent on the United States," he said, noting that this is exactly what Donald Trump began to achieve even before he entered the Oval Office.
In his view, the emerging situation would lead to Russia losing part of its income from January to February 2025, but at the same time it would stimulate an increase in gas prices, which could later allow Russia to compensate significantly for the losses.
But the most profitable scenario for Russia, he said, is one that allows it to maintain gas supplies to its Central European counterparts and gradually increase supplies to China, given that the capacity of the alternative route to supply gas to Europe via Turkey is very limited.
It is noteworthy that Dmitry Peskov, press secretary of the Russian president, confirmed on August 28, 2024, the existence of alternative routes for gas supplies from Russia to Europe, stressing the possibility of establishing a gas center in Turkey.
During the Eastern Economic Forum in September 2024, Russian President Vladimir Putin described the "Turkish stream" as an alternative route for gas supplies to Europe if Ukraine refused to cross.