Russian gas company Gazprom PJSC has halted gas supplies through Ukraine as five-year transit agreements expired on January 1 at 8 a.m. Moscow time. “Due to the repeated and explicit refusal of the Ukrainian side to extend these agreements, Gazprom was deprived of the technical and legal ability to supply natural gas for transit through the territory of Ukraine from January 1, 2025,” the Russian gas company said in a Telegram post.

Ukraine had repeatedly said it would not sign a new agreement to replace the previous one that expired on December 31 due to Russia’s invasion of its territory. 2025 is now the first year since the collapse of the Soviet Union in 1991 that no gas will be piped through Ukraine to Europe.

The expiration of the deal marks the near-total loss of Moscow’s once powerful influence in the European gas market but comes at a critical time as reserves in Europe are also running out faster than usual, making it more difficult to meet storage targets for the coming season. The disruption of supply through Ukraine is expected to be a major blow for Moldova. Among EU countries, Slovakia will be the most affected. Hungary will continue to receive Russian gas from the south via the TurkStream pipeline in the Black Sea, although it wants to maintain transit through Ukraine.

For its part, Kyiv is foregoing about $800 million a year in payments from Moscow, while Gazprom will lose about $5 billion in gas sales to Europe through Ukraine.

Rising prices

At the same time, gas prices in Europe are rising. According to Bloomberg data, natural gas for February delivery rose as much as 2.2% on Tuesday. In particular, the Dutch gas contract, a benchmark for Europe, strengthened 1.1% to 48.4 euros per megawatt-hour at 9:43 a.m. in Amsterdam.