After more than four decades of uninterrupted Russian gas flowing through Ukraine to Europe, the taps were turned off on January 1, 2025. Not even Russia’s full-scale invasion of Ukraine in 2022 or Ukrainian forces crossing into Russia’s Kursk region in 2024 had disrupted the flow. Yet, the two sides failed to reach a new transit agreement. Meduza explains the losses Russia, Ukraine, and Europe will face from the cutoff, potential alternatives to Russian gas, and how energy prices have already been affected.
On January 1, Russia’s state energy giant Gazprom and Ukraine’s Energy Ministry both announced the cessation of gas transit through Ukraine via the Urengoy–Pomary–Uzhhorod pipeline. In 2023, the pipeline carried more than 14 billion cubic meters of Russian gas to Europe, accounting for about five percent of the continent’s demand. Replacing even this relatively small volume, however, won’t be without its challenges.
European countries will need to turn to more expensive gas and rely increasingly on the volatile liquefied natural gas (LNG) market. This comes as underground gas storage facilities are being depleted at record rates, exacerbating an ongoing energy crisis driven by Russia’s full-scale invasion of Ukraine. Over the past year, gas prices have climbed more than 50 percent, with the increases accelerating in recent weeks due to heightened demand amid colder weather.
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‘The collapse of an era’
Bloomberg estimates that Gazprom will lose approximately $6 billion in annual export revenue due to the gas transit halt. Sergey Vakulenko, a senior fellow at the Carnegie Russia Eurasia Center, offered a slightly lower estimate, placing the annual losses at $5 billion.
Ukraine will also forfeit hundreds of millions of dollars in revenue previously earned from its gas transit infrastructure. Russian President Vladimir Putin estimated the losses at up to $800 million, an assessment shared by Reuters. Beyond the financial cost, Ukraine will lose its position as a strategic partner for Europe in supplying affordable raw materials from Russia.
“This termination of gas transit is not just a supply-chain adjustment — it’s the symbolic collapse of an era,” Tatiana Mitrova, a researcher at Columbia University’s Center on Global Energy Policy, told Bloomberg. “A significant part of the Soviet-built gas-pipeline network, which once brought Siberian gas to Europe, is now a shadow of its former self.”
Meanwhile, most of Gazprom’s clients in Central Europe are shifting to alternative import sources — albeit at a higher cost. Slovakia’s largest energy company, SPP, estimated that securing stable supplies through new routes will add 90 million euros ($92.7 million) to its expenses. The company also warned that Europe faces an increased risk of energy instability if the winter proves particularly cold.
Commenting on the cessation of supplies through Ukraine, Gazprom said it no longer had the “technical or legal” ability to continue transit and blamed Kyiv for the situation. Russia’s Foreign Ministry added that the United States would be the primary beneficiary of the supply halt. Ukraine’s Energy Ministry, however, called the end of the transit agreement a “historic event,” while President Volodymyr Zelensky described it as “one of Moscow’s greatest defeats.”
The ripple effect
Experts say the halt in Russian gas transit through Ukraine is unlikely to cause sharp shocks to the European gas market, even as costs climb. On January 2, prices for monthly futures at the TTF hub rose 3.7 percent to 50.7 euros ($52.2) per megawatt-hour by 6:00 p.m. Moscow time, reaching their highest levels since the fall of 2023.
One likely factor behind the price increase is the accelerated depletion of reserves in European underground gas storage facilities, which have now dropped below 75 percent capacity. While supplies for the current heating season appear sufficient, concerns are growing about the ability to refill storage ahead of next winter, given the loss of another supply route.
According to Bloomberg’s forecasts, Ukraine’s decision to halt the transit of Russian pipeline gas could lead to a greater share of Russian liquefied natural gas (LNG) on the European market. Although some politicians advocate boycotting all Russian energy resources, LNG imports from Russia remain at record levels. Much will depend on the policies of U.S. President-elect Donald Trump, who could either ease sanctions on Russia in exchange for a peace deal or tighten them if the Kremlin refuses to de-escalate the war in Ukraine. Regardless of these factors, analysts expect gas prices for households and industries to continue rising in 2025.
Slovakia has been particularly hard hit by the transit halt, losing an estimated $500 million annually in transit fees. Prime Minister Robert Fico warned of “radical consequences” for the European Union as a whole and threatened Ukraine with retaliatory measures, including cutting electricity supplies. The key question now, according to Jonathan Stern, a distinguished research fellow at the Oxford Institute for Energy Studies, is whether affected countries, particularly Slovakia, can negotiate with Russia to restore at least some of the lost gas volumes.
Ukraine’s decision to halt gas transit to Europe has also had repercussions for Moldova. In Chisinau’s case, however, it was Russia that cut off supplies in the fall of 2024, citing a dispute over Moldova’s gas debt. Moscow claims the debt exceeds $700 million, a figure Chisinau says is inflated.
The impact of Gazprom’s decision to end deliveries and Ukraine’s transit halt has been most severe in Transnistria, a Moscow-backed breakaway region in Moldova. Since January 1, the region has faced heating and electricity outages. About 75,000 households have been left without gas and more than100,000 are receiving only limited supplies. Industrial operations in the enclave have also ground to a halt.
A European Commission spokesperson told Bloomberg that the E.U. was not caught off guard by the transit halt and was “prepared for [the situation].” European Commission President Ursula von der Leyen previously stated this as well, setting a goal for the bloc to eliminate all fossil fuel imports from Russia by 2027.
Gazprom continues to supply gas to Serbia and Hungary via the TurkStream pipeline, which bypasses Ukraine. However, Russia cannot fully offset its losses — or those of other countries in the region — by increasing flows through TurkStream. Another pipeline through Poland was shut down after Russia’s full-scale invasion of Ukraine, and the Nord Stream pipeline, which ceased operations at the same time, was severely damaged in an alleged Ukrainian sabotage operation in 2022.
In late 2024, Gazprom also lost a long-standing European client: Austria. The Austrian energy company OMV terminated its contract with the Russian firm due to legal disputes. With the Ukrainian transit route now halted, any resumption of gas cooperation between Moscow and Vienna appears even less likely.
