Russian gas flows via Ukraine suspended as transit deal expires

Russian gas flows via Ukraine were suspended Jan. 1 following the expiry of the five-year Russia-Ukraine gas transit agreement, with Russia's Gazprom saying it had been "deprived" of the ability to supply gas for delivery via Ukraine.

Data published by Ukrainian gas grid operator GTSOU also showed zero nominated flows at the Sudzha entry point on the border with Ukraine for Jan. 1.

For most of 2024, around 42 million cu m/d of Russian gas flowed to Europe via Sudzha -- the equivalent of around 15 Bcm/year -- with gas finding homes in Moldova, Slovakia, Austria and Italy.

But with the expiry of the five-year transit deal signed at the end of 2019, Russia is no longer able to deliver gas to Europe via Ukraine.

"Due to the repeated refusal of the Ukrainian side to extend the agreement, Gazprom was deprived of the technical and legal ability to supply gas for transit through the territory of Ukraine from Jan. 1," Gazprom said.

"Since 0800 Moscow time, Russian gas has not been supplied for transportation through Ukraine," it said.

European gas prices moved higher late Dec. 31 following the initial nomination data published for Jan. 1, with the Dutch TTF price for February delivery passing the Eur50/MWh mark at 1443 GMT, according to ICE data.

Platts, part of S&P Global Commodity Insights, assessed the TTF price for February delivery earlier on Dec. 31 at Eur48.52/MWh.

GTSOU said Jan. 1 that due to the expiry of the deal, gas transmission at Sudzha had been suspended.

"GTSOU has informed its international partners regarding this issue in accordance with the established procedure," it said in a statement.

"Since Jan. 1, the Ukrainian gas transmission system has been operating in a mode without Russian gas transit."

GTSOU said it had prepared its infrastructure in advance to operate in "zero transit mode" while continuing to ensure reliable gas supply to Ukrainian consumers.

Fatih Birol, the executive director of the International Energy Agency, said Jan. 1 that there was no "imminent" gas supply security risk for the EU caused by the suspension of supplies via Ukraine.

But, he said, the EU's LNG import needs may rise and "may lead to tightening of global gas markets in 2025."

Sudzha flows

Russian gas flows had continued via Sudzha despite the ongoing Russia-Ukraine war and Ukrainian forces entering the Kursk area in a surprise incursion into Russian territory in early August.

The incursion prompted concerns that fighting could damage key gas infrastructure, but flows continued unimpeded.

A number of European countries -- chief among them Slovakia and Hungary -- had made urgent calls for transit to be continued but Kyiv has remained steadfast in its position that Russian gas delivery via Ukraine should end.

Ukrainian President Volodymyr Zelensky, speaking from Brussels Dec. 19, reiterated that the country would not facilitate the transit of any gas via its territory if it benefitted Russia financially.

Slovakia's economy minister Denisa Sakova said Dec. 31 that Ukraine had decided to take a unilateral step that would "also harm Slovakia."

The country's economy ministry said that halting the transit of Russian gas through Ukraine was not a "rational" decision and would cause an increase in prices on European markets.

Slovakia's Prime Minister Robert Fico had visited Moscow Dec. 22 for talks on Russian gas supplies to Slovakia and urged the EU to reevaluate Ukraine's intention to end the transit of Russian gas from Jan. 1.

But Russian President Vladimir Putin said Dec. 26 that it would be "impossible" to agree on any Ukrainian gas transit deal before the end of 2024.

Putin has previously blamed Ukraine for refusing to agree to any new deal.

Speaking Dec. 19, Putin said it was Ukraine that had refused to extend the contract, and that the country was cutting off Russian gas supplies to European consumers.

This would create problems for European consumers used to cheap Russian gas, he added.

Transit volumes

Russian gas flows via Ukraine of around 42 million cu m/d through 2024 were already well down on the contracted level of 110 million cu m/d.

Under the 2019 transit agreement, Russia was contracted to supply 65 Bcm of gas via Ukraine in 2020 -- or 178 million cu m/d -- and 40 Bcm each year between 2021 and 2024.

Supplies remained lower than the contracted volume, however, following the Russian invasion of Ukraine in February 2022.

Russian gas transit via Ukraine was as high as 117 Bcm in 2008 but fell to just 14.65 Bcm in 2023.

Ukraine had repeatedly ruled out talks with Moscow on continued Russian gas transit, with Zelensky's comments on Dec. 19 seemingly the final nail in the coffin.

Russian pipeline supplies to Europe in the first 11 months of 2024 via Ukraine and TurkStream -- excluding deliveries to Moldova and Turkey -- reached 26 Bcm, according to data from Commodity Insights, compared with 24.5 Bcm for the whole of 2023.

Supplies via TurkStream to Europe were some 24% higher year on year in the January-November period, the data showed.

With Russian gas flows via Ukraine having now ended, the TurkStream route into Europe will be the only remaining pipeline connection for Russian gas to reach European markets.

Ukraine grid

Ukraine, meanwhile, has been busy making preparations for the end of Russian gas flow through the country.

In April, GTSOU said it was preparing for a "zero transit scenario" under its new 2024-29 strategy.

"We are preparing for zero transit from Jan. 1, and we have been doing this for a long time," Ukraine's energy minister German Galushchenko said Dec. 11 at a forum in Berlin.

"This year alone, we have conducted several stress tests for our gas system, how it will function with zero transit," Galushchenko was quoted as saying by Ukrainian news agency Ukrinform.

GTSOU CEO Dmytro Lyppa said in April that the company's new strategy would be an "important step" toward the stable operation of the grid in a "new operating environment."

The EU, too, has been preparing for an end to transit. In an interview with Politico published Dec. 12, the EU's new energy commissioner Dan Jorgensen said he expected Russian gas flows via Ukraine to be halted from Jan. 1.

Jorgensen has also pledged to produce within 100 days of taking office a roadmap designed to end Russian energy imports.

Presenting his priorities in November ahead of taking up his post, Jorgensen said the share of Russian gas in Europe was still too high.

He told Politico that it was obvious that "something new needs to happen," saying his roadmap would include tools to solve the "remaining part of the problem."