Russian natural gas flows to Europe via Ukraine have stopped as a key transit deal expired, raising the stakes for the continent’s energy security as it draws heavily on the reserves. “Due to the repeated and explicit refusal of the Ukrainian side” to extend the five-year agreements, Gazprom PJSC “was deprived of the technical and legal possibility to supply gas for transit through the territory of Ukraine from January 1, 2025,” the Russian gas giant said in a statement on Telegram.

Cutting off Russia’s oldest gas route to Europe ends a decade of strained relations sparked by Russia’s 2014 seizure of Crimea. “We stopped the transit of Russian gas. This is a historic event. Russia is losing its markets, it will suffer economic losses. Europe has already taken the decision to abandon Russian gas,” said Ukraine’s Energy Minister German Galushenko.

The disruption of natural gas flows was expected amid the war, which began in February 2022. Ukraine has been adamant that it would not extend the deal amid the military conflict.

For five decades, Ukraine has been a key route for gas supplies to Europe, even during the nearly three years since Russia’s full-scale invasion of Ukraine. The disruption means that some central European countries that have relied on the flows will be forced to source more expensive gas from elsewhere, increasing pressure on supplies at a time when the region is already depleting its winter storage at the fastest rate in years.

Ukraine halted exports of Russian gas through its territory as of 7 a.m. local time on Wednesday in the interests of national security, Kyiv’s Energy Ministry said in a statement on Telegram.

Ukraine’s gas infrastructure has been prepared to operate amid zero transit from Russia and the country’s foreign partners have been warned in advance, the statement said. Ukraine has secured guaranteed gas supplies boosted through a southern route as well as from Poland, the country’s gas transmission operator said on its website.

For now, there is no alternative to the five-year transit agreement, despite months of political conflict. While shipments through Ukraine account for only about 5 percent of Europe’s gas needs, the region is still feeling the aftershocks of an energy crisis triggered by the Kremlin’s full-scale invasion of its neighbor.

The end of the transit deal highlighted Europe’s continued dependence on Russian gas via pipelines and shipments of liquefied fuels, as well as the cracks in the bloc’s approach to decoupling from Russian supplies.

European Commission President Ursula von der Leyen has set a political goal of phasing out Russian fossil fuels by 2027 in the wake of the invasion and said the end of transit would have little effect on regional energy markets. Still, countries such as Hungary and especially Slovakia have waged an increasingly hard campaign to maintain the flow of fuel.

Europe also faces an increasingly tight global gas market. The first-month contract ended the year with an annual rise of 51% – the biggest since 2021.

Scaling controversy

Ukraine’s president, Volodymyr Zelensky, last month rejected any arrangement that would finally send money into Russian coffers as the war continues. Meanwhile, Slovakia’s prime minister, Robert Fitso, has threatened Ukraine with a possible power cut, raising questions about broader energy security in the region. In a last-ditch effort over the weekend, Fizzo urged the EU to address the looming disruption of supplies through Ukraine, saying the economic impact on the bloc would outweigh the impact on Russia. He estimated that European consumers could face up to 50 billion euros ($52 billion) in additional gas charges annually and another 70 billion euros in higher electricity costs.

Slovakia and some other Central European states have favored discounting gas from the east, and in recent months, key companies from the region have engaged in a race to build support for an alternative to the Russia-Ukraine deal.

Slovakia has said it can handle the loss of Russian gas, but other supplies would likely be costly to reach the country . Russian gas also used to flow from Slovakia to Austria and the Czech Republic, although the latter two countries no longer buy the fuel directly from Gazprom.

Europe is ready

“The disruption of the flow through Ukraine on January 1 is the expected situation and the EU is prepared for it,” a European Commission spokesman told Bloomberg News. The commission has been working with member states for more than a year to prepare for such a scenario, he added.

The bloc has been diversifying its supplies since 2022, increasingly turning to imports of liquefied natural gas, mainly from the United States. There are “various options” for arranging gas transit to central and eastern Europe, including through another pipeline route and LNG terminals, the German Economy Ministry said Tuesday.

Officials in Poland, which takes over the rotating EU presidency on Wednesday, said the country was in close contact with the Commission and “is ready to coordinate further steps with member states if necessary from January 1”. Disagreements between Moscow and Kiev have in the past disrupted gas shipments to European customers during the winter months.

In 2009, Russian gas flows through Ukraine to Europe were halted for nearly two weeks, with more than 20 countries affected during the ice ages, until the two countries signed a gas deal that ended their dispute. A shorter disruption occurred in 2006. The agreement that expires in 2019 was also the result of last-minute negotiations.

However, the war makes a quick solution unlikely for now. Russian President Vladimir Putin said last week that there is no longer time to reach a deal before the end of the year. He also said a lawsuit by Ukraine’s Naftogaz – which claims Gazprom has not paid in full for transit services – is another obstacle.

Some European countries have also warned against considerations that would label Gazprom fuel as non-Russian. Energy companies in the region have in the past presented options such as taking ownership of the fuel when it enters Ukraine or resorting to a complex swap involving Azerbaijan’s energy company Socar as an intermediary.

Other routes

Russia and the former Soviet Union spent half a century building up a significant share of the European gas market, which at its peak was around 35%, but the war almost completely destroyed this activity for Gazprom. The Yamal-Europe pipeline through Belarus has also been closed. The Nord Stream pipeline connecting Germany to Russia was damaged by explosions in 2022, and the newer Nord Stream 2 connection was never approved by Berlin.

Combined, the various routes delivered a record 201 billion cubic meters (bcm) of gas to Europe in 2018. Russia shipped about 15 bcm of gas through Ukraine in 2023, up from 65 bcm when the last five-year contract began in 2020.

Russia continues to supply gas to countries such as Serbia and Hungary through another pipeline, TurkStream, which bypasses Ukraine. But this connection is not enough to fully compensate for the complete loss of the route from Ukraine.