Russian gas flow to Europe via Ukraine stopped: Who does it hurt?
What happens when Russian gas supply to Europe via Ukraine ends?
The recent cessation of Russian gas flow to Europe via Ukraine has significant implications for various stakeholders, primarily affecting Ukraine, Russia, and several European nations.
Impact on Ukraine
National Security: Ukraine’s decision to halt gas transit is framed as a measure of national security amid ongoing conflict with Russia. The Ukrainian government aims to prevent Russia from profiting from gas sales that could fund its military operations.
Economic Considerations: While the transit fees previously provided Ukraine with around $800 million annually, the government has prioritized national security over economic benefits. The cessation of gas transit is seen as a historic moment, marking a shift in energy dynamics in Europe.
Impact on Russia
Financial Losses: The termination of the transit agreement means Russia loses a vital market for its natural gas, which previously accounted for nearly 40% of the European Union’s pipeline gas supply. This loss is expected to significantly diminish Russia’s earnings, which were estimated at $5 billion to $6.5 billion per year from this route alone.
Market Share Decline: Following the suspension, Russia’s share of the EU pipeline gas market plummeted to about 8%, a stark contrast to its previous dominance. This decline limits Moscow’s ability to exert energy leverage over Europe.
Impact on European Nations
Energy Crisis Potential: Eastern European countries, particularly Austria, Slovakia, and Moldova, are likely to face immediate challenges due to their reliance on Russian gas supplied through Ukraine. For instance, Slovakia sourced approximately two-thirds of its gas needs from this route. The situation is exacerbated during winter when energy demand peaks.
Diversification Efforts: In response to the ongoing energy crisis and the cessation of Russian supplies, many European nations have been diversifying their energy sources. Countries like Norway and the United States have stepped in to fill the gap left by Russian gas. However, this transition may not be seamless or immediate.
The halt in Russian gas supplies through Ukraine represents a critical juncture in European energy politics. While it fortifies Ukraine’s stance against Russian aggression, it poses significant risks for both Russia and several European nations reliant on these supplies. The long-term effects will likely reshape energy strategies across Europe as countries seek alternatives to Russian gas.
