Russian gas supplies to Europe via Ukraine are set to cease on New Year’s Day, marking the end of Moscow’s longstanding dominance in the European gas market.
The closure affects Russia’s oldest gas export route to Europe, a Soviet-era pipeline, as the five-year transit agreement between Russia and Ukraine expires at the end of 2024. According to Ukraine’s gas transit operator, Russia has not requested gas flows for January 1, 2025.
Since the outbreak of the Ukraine war in February 2022, the European Union has significantly reduced its reliance on Russian gas, securing alternative sources of energy. Remaining buyers of Russian gas, including Slovakia and Austria, have arranged for alternative supplies, and analysts predict minimal market disruption from the stoppage.
However, the cessation of gas flows carries substantial geopolitical significance. Russia has lost its dominant share of the European gas market to competitors like the United States, Qatar, and Norway. Gazprom, once the world’s largest gas exporter, recorded a $7 billion loss in 2023—the company’s first annual loss since 1999.
For Europe, the end of Russian gas supplies has come at a cost. The loss of inexpensive Russian energy has contributed to a major economic slowdown, heightened inflation, and exacerbated a cost-of-living crisis. While Europe has successfully diversified its energy sources, the loss has intensified long-term concerns over its global competitiveness, particularly regarding Germany’s industrial sector.
Russia and the former Soviet Union spent half a century building a significant share of the European gas market, which once accounted for about 35% of Europe’s supply. That business, however, has been effectively dismantled by the Ukraine war.
Most Russian gas routes to Europe are now closed, including the Yamal-Europe pipeline via Belarus and the Nord Stream pipeline under the Baltic Sea, which was sabotaged in 2022.
The remaining operational route through Ukraine, which transported gas from Siberia via Sudzha in Russia’s Kursk region, will also halt. The pipeline, under Ukrainian military control, transported gas to Slovakia, where it branched into lines serving the Czech Republic and Austria. Ukraine has declined to negotiate a new transit agreement, effectively ending this historic energy route.
