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Europe’s energy landscape shifts as Russia-Ukraine gas transit deal ends
8/1/2025
News
The flow of some 14bn m3 of Russian gas through Ukraine’s pipelines halted on 1 January 2025, marking the end of a five-year transit agreement that had been a cornerstone of Europe’s energy supply.
Ukraine had been under pressure from countries such as Slovakia to reopen talks for a new gas flow agreement. However, President Volodymyr Zelenskyy said he would not renew a deal that financially benefited Russia.
Slovakia has been a main entry point of Russian gas into the EU, earning transit fees from piping the gas on to Austria, Hungary and Italy. However, the Slovak Economy Ministry estimates the country will now have to pay some €177mn for alternative routes. The country’s energy regulator announced in early December 2024 that gas prices for consumers would rise in 2025 as a result.
Ukrainian Energy Minister German Galushchenko hailed the end of the gas transit agreement as a ‘historic event’, predicting financial losses for Russia as it loses an important market. According to the BBC, Russia was still earning some $5bn/y in gas sales to Europe despite the EU significantly reducing imports of Russian gas following Russia’s incursion into Ukraine in 2022. Europe was importing some 40bn m3/y of Russian gas before the outbreak of war. Since 2022, the region has diversified supplies, including LNG imports from Qatar and the US, and piped gas from Norway.
There are ‘no security of supply concerns’ following the end of the Ukraine transit agreement, according to the European Commission. ‘With the current level of integration and diversification of the European gas market, all the Member States can have access to LNG and pipeline imports from alternative routes, making possible the entire replacement of the gas transiting through Ukraine,’ it says.
There are four major diversification routes that could be utilised, according to the Commission, with volumes mostly originating from LNG terminals in Germany, Greece, Italy and Poland, but also possibly from Türkiye.
The import route via Germany relies on the significant recent expansion of German LNG import capacities and imports of piped gas from Norway, the Netherlands and Belgium. Additional volumes of gas could flow to Austria, Czechia and Slovakia via existing infrastructure.
Meanwhile, an import route via Poland could facilitate access to Norwegian gas and LNG for the central European states and Ukraine. The Poland-Slovakia gas interconnector could allow gas to flow to Slovakia and then further to Czechia, Austria, Hungary and Ukraine, depending on actual import needs, notes the Commission.
A third import route via Italy could transport gas northward via Austria and then towards Slovakia and/or Slovenia, supporting regional energy diversity and security.
The fourth option is the Trans-Balkan route, which could flow gas from Greece, Turkey and Romania to the north, supplying southern and central Europe, including Ukraine and Moldova via existing infrastructure interconnection points between Greece, Bulgaria, Romania, Hungary, Moldova, Ukraine and Slovakia.
