Ukraine Stops Transit Of Russian Gas: Implications – OpEd

The Ukrainian crisis for the US is less about Ukraine but more about gas. It was about Germany and, in particular, Nord Stream 2 pipeline that connects Germany to Russia. It was almost fully operational and ready to pump. Germans would have got a reliable source of gas energy while Russia would have got a boost to their gas revenues. This win-win situation for both parties was not liked by the US Foreign Policy establishment. This is why the Biden administration opposed Nord Stream.

President Biden said at a joint press conference along with German Chancellor Olaf Scholz in Feb 2022; “Nord Stream 2 pipeline from Russia to Germany will not go forward if Russia invades Ukraine…then there will be no longer Nord Stream 2. We will bring an end to it…I promise you we will be able to do that.”

Russian gas flow Stops on New Year’s Day?

The flow of Russian gas to several European countries was halted on New Year’s Day after Ukraine refused to renegotiate a transit deal amid war with Moscow. Ukraine’s Energy Minister German Galushchenko said in a statement, “We stopped the transit of Russian gas. This is an historic event. Russia is losing its markets; it will suffer financial losses. Europe has already made the decision to abandon Russian gas.”

Ukraine had always feared of losing leverage and high transit revenues with Europe if its pipelines become obsolete.  Russia pays Ukraine approximately $2 billion in transit fees to deliver gas through its territory. So, what has prompted Ukraine after almost 50 years and three years of War to stop transit of the Russian gas through its pipelines? Is it stakes towards a Ceasefire and American pressure for continued US support to Ukraine? The US has always opposed Russian gas direct supply to Europe on the grounds that it would strengthen Russia’s economic and political influence over the region. 

Ukraine has halted the transit of Russian natural gas through its territory following the expiration of a pre-war agreement on December 31, 2024. The latest contract was first signed in 2020 under which Ukraine was paid transport fees. But Ukrainian President Zelenskyy had warned that Kyiv would not renew the transit agreement amid the continuing war.

By ceasing the transit, Ukraine aims to reduce economic ties of Europe that could potentially fund Russian military activities against it. This move is also believed to align with the EU’s strategy to phase out reliance on Russian gas by 2027, a plan initiated in response to energy supply uncertainties caused by the war and previous disruptions by Russia. 

Implications:

• The stoppage of the flow of Russian gas will have significant implications for Eastern European countries that were dependent on Russian gas transiting through Ukraine, including Austria, Slovakia, and Moldova. Slovak Prime Minister Robert Fico has expressed dissatisfaction, citing substantial economic losses for Slovakia and indicating potential retaliatory measures against Ukraine. The stoppage will cost hundreds of millions of dollars in transit revenue and a higher fee for the import of other gas. Harsher winters for Europeans ahead.
• While this decision results in a loss of transit fee revenue for Ukraine, it is seen as a strategic measure to weaken Russia’s economic position and diminish its capacity to finance the ongoing conflict. 
• The US will sell its liquified natural gas to Europe at a higher price and therefore the opposition to Russian gas.
• European nations are forced to see alternatives to Russian gas, reducing the strategic importance of Ukraine as a transit country. LNG imports, renewable energy, and supplies from other countries may change gas flow patterns.
• With the shutdown of Russia’s oldest gas route to Europe, functional for more than 40 years, Russia’s share has dwindled to less than 10 percent. Another gas pipeline passing through Turkiye still supplies gas to countries such as Hungary.
• 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.
• Possibly the most vulnerable is Moldova. Russia sent about 2bcm of gas via Ukraine to Moldova’s pro-Russia breakaway region Transnistria annually since 2022. Moldova has already declared a state of emergency over the impending gas shortage. Moldova’s President Maia Sandu has blamed Gazprom for not considering an alternative route, and has said this winter in Moldova would be “harsh” without Russian gas.

Possible Reasons for Gas Stoppage

• Russia and Ukraine have long-standing disagreements over transit fees and contracts for gas transportation. The US has been promoting energy diversification in Europe, reducing dependence on Russian gas.    
• The US has been promoting energy diversification in Europe, reducing dependence on Russian gas.
• US sanctions targeting Russian energy exports and destruction of Nord Stream pipeline under sea (remains a mystery that who destroyed?) have already influenced Russia’s energy strategy.
• Possible stakes towards a Ceasefire and American pressure for continued US support to Ukraine

Possible US Role

The US has opposed on the grounds that direct supply of gas to Europe would strengthen Russia’s economic and political influence over the region.

Support for Energy Independence in Europe. The US has provided financial and technical support for energy projects in Europe, such as LNG terminals. The US wishes to sell its liquified natural gas to Europe and therefore the opposition to Russian gas.

By weakening Russia’s dominance in energy, the US aligns with its broader geopolitical interests. The US has pressured European allies to reduce reliance on Russian energy. 

While the US has vested interests in reducing Europe’s reliance on Russian gas, attributing this 2025 stoppage directly to US actions may be speculative but fingers do point at the US. The Ukraine crisis has made Europe pay the price of inflation and reduced energy supplies courtesy the American Energy game and sanctions which was making Europe economically linked to Russia and resulting in the reduction of US influence.