Russian gas exports to Europe: Ukraine interrupted the flow of natural gas as the agreement ended
Russian fuel shipments to several European countries were cut off on New Year’s Day after Ukraine refused to renegotiate a transit deal amid the war with Moscow.
Ukraine’s unwillingness to renew the five-year-old transit agreement aims to rob Russia of revenue that Moscow can use to fund its war, but the move will likely create an energy crisis in Eastern Europe, with Transnistria – a breakaway Moldovan region – cutting heat and hot water supplies to households.
“This puts an end to Russia’s dominance in the EU energy market,” Al Jazeera’s Jonah Hull said, as reported via Kiev, Ukraine’s capital. Prior to the invasion of Ukraine in 2022, Russia provided about 35% of the pipeline’s European herbal fuel exports.
With the closure of Russia’s oldest fuel directorate to Europe, which has been operational for more than 40 years, Russia’s share has fallen to less than 10%. Another pipeline that passes through Turkiye still supplies fuel to countries such as Hungary.
So, how will turning off the taps during the height of the winter season affect countries, particularly in Eastern Europe and what could happen next?
Russian energy company Gazprom said on Wednesday that fuel to Europe was cut off at 8 a. m. local time (0500 GMT) after the state-owned and state-owned fuel company refused to renew its new five-year transit contract.
On Wednesday, the Minister of Energy of Ukraine, German Galushchenko, said in a statement: “We have stopped the Russian gas traffic. This is a historical event. Russia is wasting its markets, it will suffer monetary losses. Europe has already taken the resolution of abandon Russian gas. “
The latest contract was first signed in 2020 under which Ukraine was paid transport fees. But Ukrainian President Volodymyr Zelenskyy had warned that Kyiv would not renew the transit agreement amid the continuing war.
Many European countries began to reduce their dependence on Russian fuel following the invasion of Ukraine through Moscow in February 2022.
At its peak, Moscow’s share of European gas imports stood at 35 percent, but has fallen to about 8 percent.
The European Union won less than 14 billion cubic meters (BCM) of Russian fuel in Ukraine on December 1, compared to the 65 BCM of the same year in which the contract began in 2020.
The fuel is sent via the Soviet-era Urengoy-Pomary-Uzhgorod pipeline from Siberia to Sudzha, a city in Russia’s Kursk region that is now under the Ukrainian military. The fuel travels through Ukraine to Slovakia. There, the pipeline splits into branches that bring strength to the Czech Republic and Austria.
The transit agreement brought monetary to Russia and Ukraine.
Ukrainian media quoted Serhii Makohon, former head of the Ukrainian GTS Operator, estimating that Russia made a significantly higher amount of money from the transit deal than Ukraine.
Makohon estimates that Russia earns five billion dollars a year, he also reported through the Reuters news agency. On the other hand, Ukraine earns $800 million a year “but most of this cash is spent on transit itself. The [Ukrainian] Treasury receives between $100 million and $200 million in taxes and dividends,” Makohon said in Ukrainska. Pravda.
Bloomberg estimated that Russia’s income is even higher, at $ 6. 5 billion a year.
Austria, Slovakia and Moldova were relying on the transit route for their power supply.
Austria was receiving most of its gas from Russia through Ukraine, while Slovakia was obtaining around 3bcm through the route annually, amounting to approximately two-thirds of its demand.
Austrian electricity regulator E-Control said it was ready for a power transfer and did not expect to suffer any outages.
Slovak Prime Minister Robert Fico said on Wednesday that the halt in supply will cost the Eastern European nation hundreds of millions of dollars in transit revenue and a higher fee for the import of other gas.
Fico asserted that this would result in the rise of gas prices across Europe. The Slovak economy ministry said that the country will have to bear the cost worth 177 million euros ($184m) for receiving gas through alternative routes.
Moldova is perhaps the most vulnerable. Russia has shipped around 2 BCM of fuel through Ukraine to the breakaway region of Moldova each year and every year since 2022. Transnistria, which borders Ukraine, then promoting electricity, generated through Russian Combusarray in controlled spaces across the Moldovan government.
Moldova has already declared a state of emergency over drawing near fuel shortages. Moldovan President Maia Sandu blamed Gazprom for not choosing a route, and said this winter in Moldova would be “tough” without Russian fuel.
However, Moldovan Prime Minister Dorin Recean has resources for diversified fuel supply.
On Wednesday, Transnistria, home to 450,000 people, cut off heating and hot water supplies to households.
Ukraine itself uses Russian transit gas, according to the European Commission, which added that the bloc was ready for the cut.
The pipeline through Ukraine is one of the last operating routes used to export Russian fuel. Other pipelines have been closed as a result of the 2022 Ukraine war, adding the Yamal-Europe pipeline through Belarus and the Nord Stream pipeline under the Baltic Sea that carried fuel to Germany.
Russia still uses the TurkStream gas pipeline in the back of the Black Sea to export gas. The pipeline has two pipelines, one supplying the domestic market of Türkiye and the other to consumers of materials in Central Europe, as well as Hungary and Serbia.
However, Turkstream has an annual capacity of 31. 5 billion cubic meters for the two combined lines.
Europe has been trying to reduce its reliance on Russian gas, as it bought liquefied natural gas (LNG) from Qatar and the US, alongside piped gas supply from Norway.
“Europe’s fuel infrastructure is flexible enough to supply fuel of non-Russian origin to select routes in Central and Eastern Europe. It has been bolstered through significant new LNG import capacity since 2022,” said Anna-Kaisa Itkonen, a spokeswoman for the European Commission.
SPP, a vital energy supplier in Slovakia, said in A on Wednesday that it was in a position to transition and that it would source its customers through routes of choice, basically from Germany and also Hungary. However, he added that he would face additional transit costs.
According to Austria’s Energy Regulator Electronic Control, Slovakia can source fuel from Hungary, about a third from Austria and the remaining materials from the Czech Republic and Poland. The Czech Republic also said it could be offering fuel transits from Slovakia and garage capacity.
Moldovan Power Corporate Coocom issued on Tuesday by saying that Moldova can comply with 38% of its energy wishes through national production, adding 10% of renewable energy. Coocom added that Transnistria would import the remaining 62% of neighbor Romania.