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Even though it is at war, Ukraine has been sending Russian gas to European customers.
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But that arrangement, which dates back to the fall of the Soviet Union, is out of date.
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Russia was estimated to be worth $5 billion by 2024 in gas transportation, while Ukraine has increased to $1 billion.
Russia can no longer send natural gas to Europe through Ukrainian pipelines after a five-year deal, reached before the war, expired on Wednesday.
It marks the end of a long-standing plan to use Ukraine as a conduit for Russian gas to the west – a deal that continued even when a major war broke out in 2022.
European countries that received that gas, such as Slovakia and Austria, paid Russia for this energy. Reuters calculated in December that Russia's economy would gain nearly $5 billion by 2024 just from supplying gas through Ukraine.
Meanwhile, the news agency estimated that Kyiv stands to receive between $800 million and $1 billion that year in travel funds.
However, Ukraine has signaled for months that it plans to let the deal expire on January 1, 2025, and has now followed through on that promise.
“When Putin was given the post of president of Russia more than 25 years ago, the annual flow of gas from Ukraine to Europe reached more than 130 billion cubic meters. Today, it is equal to 0,” wrote the President of Ukraine Volodymyr Zelenskyy .
Ukraine's energy minister, Herman Halushchenko, said the transit agreement was on hold for reasons of national security.
Russian gas company Gazprom confirmed on Wednesday that its energy flows to Ukraine have stopped, citing “the repeated and clear refusal of the Ukrainian side to extend these agreements.”
The defunct Ukraine-Russia deal exposed the complexity of the war and its political ramifications for Europe, with European Union countries struggling to reduce their reliance on Russian power as they supplied weapons to Ukraine and tried to punish Moscow.
And as thousands died every week amid bitter fighting in Luhansk, Donetsk, Kharkiv and Kursk, gas flowing through the same areas allowed Kyiv and Moscow to profit from each other's goods and services.
Ukraine has piped Russian gas to Europe since the fall of the Soviet Union in 1991, and gas customers have expressed concern that they may not be able to find a timely replacement if the deal expires.
Slovakia's President, Robert Fico, criticized Kyiv's decision in a New Year's speech, saying that cutting off cheap Russian gas to Europe would have a “big impact” on EU countries but would not harm Russia.
Austria, for its part, cut ties with Gazprom in December, accusing Russia of manipulating the Austrian gas company OMV by using force as a bargaining chip for European support for Ukraine.
Losing Austria as a customer was yet another blow to Moscow's gas industry as Europe weaned itself off Russian energy supplies.
The EU said in March that about 8% of its natural gas would come from Russia in 2023, down from 40% in 2021.
Since the start of the war, the US and Norway have emerged as the two biggest winners among natural gas suppliers. The EU said gas imports from the US in 2023 will triple from 2021, filling about 20 percent of the union's gas.
Other countries on the continent, such as Hungary, an EU member led by a president with close ties to Moscow, can now access Russian gas through the TurkStream pipeline, which runs along the Black Sea towards the Balkans.
Moldova, which is not a member of the EU, and the separatist region of Transnistria, is expected to be hit hard by the suspension of the Ukraine-Russia agreement, as the country's largest power plant has historically relied on Russian electricity.
Read the original article on Business Insider
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