Russia to close gas deliveries to Europe via Ukraine, Moldova fears energy shortage

For several days and as January 1 approaches, the Russian company Gazprom has significantly reduced the volumes of gas sent to Europe via Ukraine. From the early hours of 2025, the taps will be completely closed at the end of a five-year transit agreement which made it possible to maintain the flow of gas despite the war in Ukraine. But, due to the ongoing conflict, kyiv refused to negotiate a new agreement.

Russia and the Soviet Union had spent half a century building up a significant share of the European gas market, which reached 35% at its peak, but the war in Ukraine all but destroyed that business for Gazprom. In 2023, the Russian gas giant posted its first annual loss since 1999 of nearly $7 billion.

While waiting for the end of this agreement which will cause Ukraine to lose nearly 800 million dollars and probably several billion for Moscow, it risks seriously affecting several countries in the east of the continent which remain very dependent on Russia for reasons geographical isolation, or political when it comes to maintaining close ties with the Kremlin.

“Any alternative will be significantly more expensive”

In the European Union, Austria, Hungary but especially Slovakia, where 65% of gas demand in 2023 was met by this route, risk being affected.

However, Austria, which was still importing 90% of its gas from Russia this summer, took the lead and ended its long-term relationship with Gazprom in December, turning the page after almost six decades on the grounds of “multiple contractual violations.” The big black spot remains Slovakia.

Nationalist Prime Minister Robert Fico visited Moscow saying that Bratislava prefers to import Russian gas, “because it is cheaper”. “Gazprom pays transit costs through Ukraine,” while if Slovakia has to use suppliers further afield, “it will have to pay for transportation.” The Slovak gas company SPP, which supplies nearly 1.5 million homes, says it can call on other sources. But “diversification has a price and any alternative to Russian gas will be significantly more expensive,” said spokesperson Ondrej Sebesta, putting the additional cost at “at least 150 million euros”.

For Hungary, the consequences should be relatively small. The country receives most of its Russian gas imports via TurkStream and kyiv’s decision will only marginally affect it. Despite everything, Prime Minister Viktor Orban did not want to abandon this route in order to maintain “reasonable prices”. He had proposed “a trick” which would have made it possible to buy Russian gas “before it entered Ukrainian territory”. “Once in Ukraine, he would no longer be Russian but Hungarian,” he suggested.

Electricity restrictions in Moldova

Outside the European Union, Moldova risks paying the price for this ruling. The Russian giant Gazprom announced on Saturday that it would stop delivering gas to Moldova on January 1 following a financial dispute with this former Soviet republic which has just re-elected a pro-European president. “Gazprom will introduce a reduction to zero m3 per day of its natural gas deliveries to the Republic of Moldova, effective January 1, 2025 at 5 a.m. GMT,” it said in a statement. Its decision is “linked to the refusal of the Moldovan side to settle its debts”, stipulates the group, which “reserves the right” to decide on other actions, including that of terminating its gas contract with Moldova, a country among the poorest in Europe. Moldovan Prime Minister Dorin Recean denounced on Facebook a “tactic of oppression”, Russia using “energy as a political weapon” to leave residents “without light or heating in the middle of winter”.

The Moldovan Parliament had approved the establishment of a state of emergency for a period of 60 days, from December 16, in anticipation of this expected interruption of deliveries. As of Friday, the government announced drastic measures to reduce electricity consumption in the country from January 1, in particular by limiting lighting and shifting industrial production times from peak hours of household consumption.