MOSCOW: Russian gas supplies to Europe via Ukraine are set to end on New Year’s Day, bringing down the curtain on Moscow’s long period of dominance of supply in the European gas market.
Russia’s oldest gas export route to Europe, a pipeline dating back to Soviet days, was set to shut at the end of 2024, as a five year transit deal between Russia and Ukraine expires. Data from Ukraine’s gas transit operator showed on Tuesday (Dec 31) that Russia had not requested any gas flows for Jan 1.
The European Union drastically reduced its dependency on Russian gas after the outbreak of the war in Ukraine in February 2022 by seeking alternative gas sources.
The remaining buyers of Russian gas such as Slovakia and Austria have arranged for alternative supplies, and analysts foresee minimal market impact from the stoppage. European benchmark gas prices settled at 48.50 euros per megawatt hour on Tuesday, only marginally up from opening trade.
Stopping the gas flow will have a much bigger geopolitical significance, however.
Moscow has lost its dominant share of gas supplies to countries in the European Union to rivals such as the United States, Qatar and Norway since it invaded Ukraine, which prompted the EU to cut its dependence on Russian gas.
Once the world’s biggest gas exporter, state-controlled Gazprom recorded a US$7 billion loss in 2023 alone, its first annual loss since 1999.
For Europe, the loss of cheap Russian gas supplies contributed to a major economic slowdown, a spike in inflation and the worsening of a cost of living crisis.
Source: CNA
