Ukraine turned off Russia’s taps: Here are the effects

As expected, Ukraine ended the transit of Russian natural gas at the turn of the year after the countries’ agreement expired.

Tampere University professor specializing in energy policy Pami Aalto estimates that the interruption of natural gas transport is part of the dismantling of interdependence between Russia and Europe.

Aalto does not believe that the end of gas transport will have a significant long-term effect on the price of energy in the EU.

“Of course, Slovakia and Austria will lose the piped gas product, which is perceived to be affordable. Investing in replacement solutions creates economic activity. I would see that in the long term, losing natural gas is not a loss.”

According to the Trading Economics website, which follows the market, the future prices of natural gas have risen from around 33 euros to around 49 euros per megawatt hour.

Director of the energy industry Pekka Salomaa estimates that the price of natural gas may also have been affected by the temperature. Salomaa reminds that the cessation of the import of Russian natural gas through Ukraine was already known before.

“I wouldn’t dramatize the price development terribly. It has been cooler than usual in Central and Southern Europe in December.”

The end of the contract was known

The end of the agreement had been known for several years, which has, at least in principle, given EU countries dependent on Russian natural gas the opportunity to prepare.

Slovakia, for example, has made a big fuss about it, and the country’s prime minister Robert Fico has said, according to Reuters, that the cessation of gas transport will cause more problems for the EU than for Russia.

According to Aalto, Slovakia and Austria appeal to the fact that they do not have their own sea connection, which is why the construction of a port terminal that can receive the equivalent of liquefied natural gas is not possible.

He estimates that Slovakia and Austria could have done more themselves to prepare for the end of the flow of Russian natural gas.

“The homework should have been done a long time ago. The task has not been impossible. Alternatives for the supply of natural gas within the EU from other member states have been developed extensively.”

On the other hand, Hungary, known as an EU rebel, will continue to buy natural gas from Russia through the Turkstream gas pipeline connection through Turkey, Aalto estimates.

No big blow to the Russian economy

President of Ukraine Volodymyr Zelenskyi declared gas transports to be a heavy blow to Russia.

However, Aalto estimates that natural gas has brought Russia at most about 20 percent of its export earnings, and the importance of piped natural gas has already decreased.

“The overall impact on the Russian economy is not unusually large.”

From the point of view of Ukraine, Aalto sees the end of the agreement as positive, even though Ukraine will also lose income.

The agreement has locked Ukraine into part of Russia’s natural gas infrastructure, says Aalto.

However, Ukraine would have a lot of potential in renewable energy sources such as wind and solar power. Aalto points out that renewable energy sources bring resilience in crisis situations like war.