Ukraine Halts Russian Gas Flows, Europe Faces Energy Challenges

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Ukraine has officially cut off gas supplies from Russia to Europe after the expiration of the gas transit contract on January 1, 2025. Ukrainian Prime Minister Denys Shmyhal confirmed that no new agreements would be made with Gazprom, leaving the long-standing pipeline that transported gas through Ukraine shut down, potentially permanently.

The immediate impact has been felt most severely in Moldova, which is not part of the EU. Locals in Moldova's separatist region of Transnistria are now facing winter without heating or hot water. Additionally, Gazprom has offered to supply gas through alternative routes, but Moldova disputes the terms due to an outstanding debt.

Slovakia and Hungary, both of which also relied heavily on this gas route, are now in search of alternative supplies. Slovakia anticipates an additional cost of nearly €180 million in 2025 to secure gas, while Hungary plans to increase its imports through the TurkStream pipeline, the only remaining land route into the EU from Russia.

Despite these challenges, European gas supply remains stable, as the pipeline through Ukraine accounted for a minor portion of the continent's needs. However, analysts warn that the cessation of these supplies may tighten gas markets and increase prices, which have already surged over the past year.

The International Energy Agency has urged European nations to assist Moldova during this crisis, while Poland has offered to increase its electricity exports to Ukraine amid tensions with Hungary and Slovakia, who have threatened to limit their support.

As Europe prepares for a winter without a direct flow of Russian gas, the shift towards liquefied natural gas imports is expected to intensify, although overall gas imports from Russia are projected to decline significantly in the upcoming years.

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