Gazprom Reduces Gas Supply Following Expiration of Europe Transit Deal

Moscow (Eurotoday) – Gazprom reduces gas flow to Europe before transit deal expires, marking a loss of Moscow’s market dominance.

Russian energy company Gazprom said it would pump a reduced volume of gas to Europe via Ukraine on Tuesday, the last day before the expiry of a deal that had kept the gas flowing throughout nearly three years of war.

Gas flows are likely to stop completely on Jan. 1 after the expiry of the five-year transit agreement between Russia and Ukraine, marking an almost complete loss of Moscow’s once mighty hold over the European gas market. The remaining buyers of Russian gas such as Slovakia, the Czech Republic and Austria have arranged for alternative supplies and analysts foresee minimal market impact from the Russian gas flow stoppage.

What are the long-term effects of Europe’s energy transition?

Moscow has lost its dominant share of gas supplies to countries in the European Union to rivals such as the United States, Qatar and Norway since the 2022 invasion of Ukraine, which prompted the EU to cut its dependence on Russian gas. Once the world’s biggest gas exporter, state-controlled Gazprom recorded a $7 billion loss in 2023 alone, its first annual loss since 1999.

The reduction in deliveries of Russian gas has led to a steep moderation in general activity in Europe as a whole and thus inflation. The EU had higher energy prices that affected the whole economy and the budgets of most households. The other sources of gas that are utilized in the region include LNG from the US and Qatar, so European countries pay more for energy. This would mean that the energy prices might be at least 50% higher than in the US, China, and India by 2050, which threatens the global competitiveness of European companies.