For the past 40 years, Russian gas supplies to Europe have been routed through Ukraine. This supply is scheduled to stop from January 1. Ukraine's Naftogaz has refused to renew its latest five-year contract with Russia's Gazprom.
Despite the war, Ukrainian President Volodymyr Zelenskyy said in a statement on December 19 that if the money for the gas supply does not reach Russia, Ukraine may continue gas transit. However, Russian President Vladimir Putin announced a week later that there was no time to sign another deal this year.
The European Union (EU) and related experts have analyzed what the situation will be if Russia's gas supply through Ukraine is stopped in the new year.
A cutoff of Russian gas supplies could be a major blow to Europe. But the EU says it is prepared to deal with this situation. The Alternative Sourcing and Supply Agreement is bringing relief to Europeans.
Meanwhile, it could be a big economic blow for Russia. Russia is moving towards a deepening crisis due to war, economic sanctions and the loss of gas markets.
Russia's gas supplies to Europe were drastically reduced after the February 2022 invasion of Ukraine. Russia's share, which once held 35 percent of the European gas market, is now down to 8 percent.
At the start of the agreement in 2020, 65 billion cubic meters (bcm) of gas were supplied annually through Ukraine. However, by December 1, 2024, this amount has come down to 14 BCM.
The EU said this amount could be met entirely by liquefied natural gas (LNG) and pipeline supplies outside of Russia. Currently, Russia has lost its market to countries like Norway, USA and Qatar.
Russia earns about $5 billion a year from gas sales, while Ukraine earns $800 million to $1 billion from gas transit fees.
Gas is supplied mainly to Austria and Slovakia via the Ukraine route. Austria gets most of its gas through the Ukraine route. Slovakia, on the other hand, gets about 3 bcm of gas from Gazprom, which is two-thirds of their total needs.
However, Slovakia says it will have no problem meeting its demand even if Russian gas supplies are cut off. They secured alternative sources through contracts with British Petroleum (BP), NE, ExxonMobil, RWE and Shell.
Most of Russia's gas supply routes to Europe have been shut down. Such as the Yamal-Europe and Baltic Sea Nord Streams passing through Belarus. An alternative is to use the TurkStream pipeline. But its power is limited.
Austria has already completed preparations for alternative supply. Slovakia can get about a third of its gas needs from Hungary, the rest from Austria, the Czech Republic and Poland.
Ukraine does not use Russian gas for gas transit. Hence there is no concern about its security.
Moldova receives about 2 bcm of gas annually from Russia, which is sent via Ukraine to the Transnistria region. Gazprom plans to cut off supplies from January 1.
Moldovan Prime Minister Dorin Rechian said his country has found alternative sources and plans to cut gas costs by one-third from January 1.
Source: Reuters
