Russia's last gas flows to central Europe

A transit deal allowing Russia to export natural gas to Europe via Ukrainian pipelines expires on Tuesday.

That comes despite efforts from Moscow and some European countries to renew the deal. Kyiv said it would only agree if Russia was not paid for the exported gas until its military actions in Ukraine stop.

Despite previous announcements that transit deals would end, Ukraine has so far never implemented them. But Kpler energy analyst Ana Subasic says this time is different.

"Starting January 1, 2025, it's our understanding that eventually the Russian gas that's coming to Europe is going to stop completely," she said.

Subasic says efforts by Slovakia and Hungary to negotiate a new transit deal have likely not been successful.

She's expecting central and Eastern Europe to make the shift from Russian gas, to liquified natural gas (LNG) coming from north-western Europe instead.

"Europe will rely on a lot more LNG to fill for this loss that we are seeing from pipeline gas, which is around 15 bcm on a yearly basis," Subasic added.

Slovakian Prime Minister Robert Fico said on December 27 that his government would consider possible countermeasures against Ukraine, including the suspension of electricity supplies, if Ukraine were to stop the transit of Russian gas to Slovakia after January 1.

The gas flow through Ukraine accounts for around half of Moscow's exports to Europe - so after decades of cheap Russian gas, consumers in central Europe now fear LNG imports will increase energy prices.

Another country affected by the pipeline stop is Austria, where the Baumgarten terminal is preparing to receive its last gas flows from Russia.

At the beginning of December, Austria unilaterally canceled its gas contract with Moscow after Russia's state-owned Gazprom had refused to supply gas to Austria's OMV company over payment disputes.

Gazprom lost one of its few remaining long-term pipeline gas buyers in Europe. For 50 years, Austria sourced on average 80 per cent of its gas supply from Russia.

Meanwhile, the TurkStream pipeline through the Black Sea won't be affected by Ukraine's transit policy, meaning Hungary will continue to receive gas from Russia via Türkiye.