Supplies of Russian gas to several European countries were cut off on New Year’s Day after Ukraine refused to renegotiate transit agreements during the Russian-Russian war.
Ukraine’s reluctance to renew the five-year transit agreement is aimed at depriving Russia of revenue that it can use to fund its war, a move likely to trigger an energy crisis in Eastern Europe and the breakaway region of Moldova. A certain Transnistria will provide shelter from the heat. and hot water supply to households.
“This marks the final end to Russia’s former dominance of the EU energy market,” said Al Jazeera’s Jonah Hull, reporting from the Ukrainian capital Kiev. Before the 2022 invasion of Ukraine, Russia supplied about 35% of Europe’s pipeline natural gas exports.
The closure of Russia’s oldest gas route to Europe, which had been functioning for more than 40 years, has reduced Russia’s share to less than 10 percent. Another gas pipeline through Turkiye still supplies gas to countries such as Hungary.
So how does turning off the faucet in the middle of winter affect countries, especially Eastern Europe, and what might happen next?
Why did the flow of Russian gas to Europe through Ukraine stop?
Russian energy giant Gazprom on Wednesday suspended gas supplies to Europe at 8 a.m. local time (5 p.m. Japan time) after Ukraine’s state oil and gas company Naftogaz refused to renew its latest five-year transit agreement. announced that it has been suspended.
On Wednesday, Ukraine’s Energy Minister German Galushchenko said in a statement: “We have stopped the transport of Russian gas. This is a historic event. Russia is losing markets and will suffer economic losses. Europe has already decided to abandon Russian gas.
The latest contract was first signed in 2020, based on its contents, Ukraine paid for the transportation costs. However, Ukrainian President Volodymyr Zelenskiy had warned that Kiev would not renew the transit agreement as the war continued.
How much gas was Russia exporting to Europe?
After the Russian military invaded Ukraine in February 2022, many European countries began reducing their dependence on Russian gas.
Moscow’s share of Europe’s gas imports peaked at 35%, but has now fallen to around 8%.
The European Union received less than 14 billion cubic meters (bcm) of gas from Russia via Ukraine as of December 1, down from 65 bcm per year in 2020, when the deal began.
The gas will be sent from Siberia via the Soviet-era Urengoy-Pomaly-Uzhgorod pipeline through the town of Suzha in Russia’s Kursk region, which is now under the control of the Ukrainian military. The gas moves through Ukraine to Slovakia. There the pipeline branches and supplies the Czech Republic and Austria.
This transportation agreement brought economic benefits to both Russia and Ukraine.
Ukrainian media cited former head of Ukraine’s GTS operator Serhii Makohon as estimating that Russia earned far more money from the transit deal than Ukraine.
McCohon estimated that Russia earns $5 billion a year, a figure also reported by Reuters. Meanwhile, Ukraine was receiving $800 million a year, but most of this money is spent on transportation itself. The (Ukrainian) Ministry of Finance receives between $100 million and $200 million in taxes and dividends,” Makohon was quoted as saying by Ukraineska Pravda newspaper.
Bloomberg estimates that Russia’s profits from the deal are even higher, at $6.5 billion annually.
Will there be a power shortage? Who will be affected by this?
Austria, Slovakia and Moldova were dependent on transport routes for their electricity supply.
Austria receives most of its gas from Russia via Ukraine, while Slovakia gets about 3 bcm per year through this route, about two-thirds of its demand.
Austria’s energy regulator E-Control said it was prepared for the supply switch and would not face any disruptions.
Slovakia’s Prime Minister Roberto Fico said on Wednesday that the supply disruption would cost Eastern European countries hundreds of millions of dollars in transportation revenue and lead to higher import fees for other gases.
Fico argued that this would increase petrol prices across Europe. Slovakia’s Economy Ministry said the country would have to incur costs worth 177 million euros ($184 million) to receive gas through the alternative route.
Perhaps the most vulnerable is Moldova. Starting in 2022, Russia will send approximately 2 billion gas annually via Ukraine to Transnistria, the pro-Russian breakaway region of Moldova. Transnistria, which borders Ukraine, will then sell the electricity it generates using Russian gas to the government-controlled region of Moldova.
Moldova has already declared a state of emergency due to impending gas shortages. Moldova’s President Maia Sandu accused Gazprom of not considering alternative routes and said Moldova’s winter would be “difficult” without Russian gas.
However, Moldova’s Prime Minister Dorin Resian said Moldova was diversifying its gas supply sources.
On Wednesday, Transnistria, home to 450,000 people, cut off heating and hot water to households.
Ukraine itself does not use Russian transit gas, the European Commission said, adding that the bloc was preparing for supply disruptions.
Has the flow of Russian gas to Europe completely stopped?
The pipeline through Ukraine was one of the last functional routes used to export Russian gas. Other pipelines have also been shut down in the wake of the 2022 Ukraine war, including the Yamal-Europe pipeline through Belarus and the Nord Stream pipeline under the Baltic Sea, which sent gas to Germany.
Russia still uses the Black Seabed TurkStream pipeline for gas exports. The pipeline has two lines, one serving Turkiye’s domestic market and the other serving customers in Central Europe, including Hungary and Serbia.
However, TurkStream’s annual production capacity is limited, with both lines combined at 31.5bcm.
What are the alternative options for Europe?
In addition to piped gas supplies from Norway, Europe is buying liquefied natural gas (LNG) from Qatar and the United States in a bid to reduce its dependence on Russian gas.
“Europe’s gas infrastructure has the flexibility to supply non-Russian gas to Central and Eastern Europe through alternative routes. Significant new LNG import capacity is being built up from 2022 onwards,” the European Commission said. Spokeswoman Anna Kaisa Itkonen said.
Slovakia’s leading energy supplier SPP said in a statement on Wednesday that it is ready for the transition and will primarily supply customers through alternative routes from Germany and Hungary. However, it added that additional costs, such as transportation fees, may be incurred.
Slovakia could receive supplies from Hungary, about a third from Austria and the rest from the Czech Republic and Poland, according to Austrian energy regulator E-Control. The Czech Republic also said it could provide Slovakia with gas transport and storage capacity.
Transnistria’s energy company Energocom said in a statement on Tuesday that Moldova can meet 38% of its energy needs with domestic production, including 10% from renewable energy. Energocom added that Transnistria will import the remaining 62% from neighboring Romania.
