Is Russia losing the energy war?
Ukraine's closure of Gazprom pipeline will diminish Russia’s energy leverage and hurt its war effort
Kyiv has finally turned off Russia’s gas supply to Europe, ending a source of income that helped pay for Moscow’s war against Ukraine. The decades-old deal, which allowed the transit of natural gas produced by Russian energy giant Gazprom through Ukraine, ended at midnight on December 31, shutting down Russia’s last major over-land gas corridor to Europe.
Kyiv’s decision marks all but the end of Europe funding Moscow’s aggression against Ukraine by purchasing energy from Russia. With European dependency on Kremlin for its energy needs already drastically reduced over the past nearly three years since the start of Russia’s full-scale invasion of Ukraine in February 2022, this is now mostly of symbolic significance. But this does not mean that it is less important or that there are no adverse consequences for the remaining Gazprom customers in Europe.
While Russia will continue to supply some gas via the Turkstream pipeline across the Black Sea — mostly to Serbia and Hungary — the loss of transit connections through Ukraine has dealt another major blow to Gazprom after the end of Nordstream 2 and connections through Belarus. Gazprom posted its first operating loss since 1999 last year and is now on schedule to lose another €5-6 billion in revenue, thus also reducing further its tax contributions to Russian budget.
Moscow, which only a few years ago supplied around 40% of the EU’s energy needs, today only provides some 8%. It has found new customers in Asia, but mostly for oil, with significant parts of its gas infrastructure now dormant and re-orientation of gas export markets towards Asia too slow and too costly for Russia to manage while it is waging war against Ukraine.
Weaning itself of Russian gas quickly—by sourcing new suppliers especially of liquified natural gas (LNG), such as the US and Norway—the EU has demonstrated a surprising ability to muster the required political will and agility to see through the consequences. The Union has also increased its energy resilience, prices have dropped well below their inflationary highs in 2022, and with gas storage tanks across Europe well over 90% full, there is no question that Brussels will be able to manage the fallout from the end of gas supplies through Ukraine.
This is also made easier by the fact that only three countries were, until recently, still dependent on Russian supplies.
Austria stopped receiving gas back in November after a contractual dispute with Gazprom, but had plans in place that were swiftly and effectively enacted, minimising any disruption.
Hungary, the second of the three countries, receives its supplies primarily via the Turkstream pipeline and can make up for shortfalls via Ukraine (and Slovakia) that way, as well as by purchasing more LNG via Croatia, where the EU built a large new terminal to process LNG imports mostly from the United States.
For Slovakia, too, the energy risks are low. The country is well-integrated into the EU energy network and has ready alternatives for the supply of electricity and gas. In any case, only about one-third of the approximately 12bcm of Russian gas that the country received annually were for its own domestic consumption. The remainder was sold on within the EU at a profit. The country’s populist and Russia-friendly prime minister, Robert Fico, tried as hard as he could to get the transit deal renewed. This included unfounded claims of an energy crisis in Europe, threats to punish Ukraine for ending the transit deal and a visit to Moscow in December – rare for an EU head of government. But all to no avail.
This visit, and his subsequent threats against Kyiv, have isolated Slovakia further in the EU, much like Hungary, whose prime minister, Victor Orbán, also visited Moscow. Unsurprisingly, the only other EU leader to travel to Moscow since February 2022 was Austria’s chancellor Karl Nehammer.
If nothing else, with the end of gas transits through Ukraine, the days when Putin could easily weaponise energy supplies against EU members are now over. This may not stop the likes of Fico and Orban, potentially empowered by the incoming Trump administration, to maintain their links with the Kremlin — but their payouts, if any, will be much reduced.
The view from Brussels and other European capitals, therefore, is likely relatively upbeat. Yet, the end of Russian gas transits through Ukraine is not victimless — and the main victim, at least in the short to mid-term is Moldova. The government-controlled areas of the country have been under an initially sixty-day energy state of emergency, imposing significant restrictions on domestic consumption.
While the government seems confident that the country can survive the winter, its state of preparedness for the crisis — which was clearly coming since Ukraine announced in the summer of 2023 that it would not renew its transit contract with Russia — was rather woeful, leading to the dismissal of its energy minister and head of the main state energy company last November.
For now, though, energy supplies for Moldova are secure — but at a much higher cost for end users who already suffer from prolonged inflationary pressures. This does not reflect well on the pro-European government which will have to face voters in parliamentary elections later in 2025 and is still recovering from a deeply polarising referendum on future EU membership and a presidential election, both of which were marred by massive Russian vote-buying and misinformation campaigns.
Perhaps an even more significant problem is the far more precarious situation in the break-away region of Transnistria. Some 300,000 people there were completely dependent on Russian gas delivered through Ukraine. As of January 1, 2025, they have no had heating or hot water. The region’s main electricity plant in Cuciurgan has switched from gas to coal, but only has coal supplies for about fifty days. While the region may thus be able to cater for the absolute minimal needs for its people at least for part of the winter, its entire economic model, including vital export industries, was entirely predicated on the availability of essentially free Russian gas. With this now no longer available, there is a real risk of an economic and humanitarian crisis quickly spinning out of control.
This, in turn, poses major political and security risks for Moldova. Already buckling under its own energy crisis and economic problems, Moldova has very little flexibility to provide aid to Transnistria or cope with large numbers of refugees from there. While this may create an opportune moment to force the issue of reunification, this would be an extraordinarily risky gamble on the part of the government. Transnistria is still home to Russian forces—deployed there as “peacekeepers” after a brief violent conflict in the early 1990s and guarding an old Soviet munitions storage facility. Its population has also been indoctrinated by Russian and separatist propaganda for more than three decades and would hardly strengthen the ranks to the pro-European electorate ahead of the upcoming parliamentary elections.
None of this means that Moldova will face violent upheaval or that Russia will somehow be able to manipulate the situation in a way that a second front could emerge in Ukraine’s back. In the long-term, Russia, with its last significant bit of leverage in the energy war against Europe now gone, is the biggest loser from the end of gas transits via Ukraine.
This an updated and expanded version of an article that was published by The Conversation on 3 January 2025.
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