Russian gas supplies to Europe via Ukraine appear set to cease as time runs out to reach a solution before a key transit deal expires, raising energy security risks for a continent heavily reliant on reserves. Benchmark prices jumped to their highest in more than a year on Tuesday as preliminary data for January 1 showed no transit bookings on the route. For fifty years, the line has been a key way for natural gas to enter Europe, even during the nearly three-decade-long Russo-Ukrainian war.
If confirmed, the stoppage means some central European countries that rely on this gas will be forced to purchase more expensive gas from elsewhere, which will further increase the pressure on natural gas supply in the context of local depletion of winter reserves at the fastest rate in years.
For now, despite months of political wrangling, there is no alternative after the five-year transit agreement between Moscow and Kiev expires. Although supply transiting Ukraine accounts for only about 5% of Europe's natural gas demand, the country is still experiencing the aftermath of the energy crisis.
The expiring transit deal highlights Europe's continued reliance on Russian pipelines and LNG supplies, as well as divisions within the bloc over weaning itself off dependence on Russian supplies.
Europe also faces increasingly tight global natural gas markets. The front-month natural gas contract ended 2024 with a 51% annual gain - the largest gain since 2021.
Initial data on Wednesday showed no orders at the Suja import station on the Russia-Ukraine border. The data, which is still subject to change in the coming hours, represents Gazprom PJSC's request to deliver gas ordered by its customers.
Data from Slovak network operator Eustream showed zero gas transits through the Velke Kapusany crossing, a key connectivity point on the Slovak-Ukrainian border and historically the main route for Russian gas supplies to Europe.