Ukraine's Gas Transit: A New Era Begins

As Ukraine's gas transit contract with Russia concludes, no new flows have been nominated, marking a potential end to a long-standing transit route. Amid Europe's shift away from Russian gas following the 2022 war, Ukraine's gas revenue faces a significant reduction. Future gas supplies remain uncertain.

Ukraine's gas transit operator announced that no new gas flows have been nominated by Russia through the Ukrainian pipeline headed to Europe as of 1500 GMT on Tuesday. This comes just before the expiration of a five-year contract signed in 2019 between Gazprom and Ukraine's Naftogaz, suggesting potential changes in regional energy dynamics.

Despite its ongoing conflict with Russia, Ukraine had been maintaining transit operations under the standing deal. However, it has clearly stated it will not renew the agreement due to Russia's full-scale invasion. This decision could lead 2025 to be the first year since 1991 without gas transiting through Ukraine to Europe.

Historically, Russian gas made up roughly half the European Union's supply, but recent geopolitical tensions and unexplained Nord Stream pipeline attacks have prompted Europe to pivot away. Russia's gas deliveries to Europe dropped to 28.3 bcm last year, a substantial decline from 2018-2019 peaks. Ukraine's transit revenue, previously in billions, is expected to fall significantly in 2024.

(With inputs from agencies.)