The future of Russian gas transit through Ukraine is at a pivotal moment, with the current transit agreement set to expire on December 31, 2024. If no new deal is reached, the flow of billions of cubic meters of gas to Europe could come to an abrupt halt, sparking concerns about energy security and economic consequences.
Slovak Prime Minister Robert Fico and several Central European companies are pressuring Ukraine to allow the continued transit of Russian gas into the European Union, even as Kyiv faces challenges stemming from Russia’s full-scale invasion in 2022. Slovakia and Hungary remain reliant on cheaper gas from Russia’s Gazprom PJSC, contradicting the EU’s broader goal of reducing dependency on Russian energy.
Tensions between Ukraine and Slovakia have heightened. Ukrainian President Volodymyr Zelenskiy accused Fico of negotiating clandestine agreements with Russian President Vladimir Putin, while Fico has threatened to cut power supplies to Ukraine. Diplomats familiar with the situation note that such escalations are not new, as previous gas transit disputes between Kyiv and Moscow were often resolved at the last minute.
Despite the geopolitical stakes, Ukraine is committed to halting Russian gas transit after December 31, as Zelenskiy views this as a way to cut off funding to the Kremlin’s war efforts. However, Ukraine’s vast gas pipeline network could become a target for Russian missile strikes if the flow stops, raising technical challenges for maintaining Ukraine’s heating infrastructure during winter. This concern could serve as a bargaining chip for Zelenskiy, allowing him to continue transit for non-Russian gas while protecting Ukraine’s energy infrastructure.
For Russia and Slovakia, the most profitable option would be to maintain gas sales directly to European buyers without intermediaries. This arrangement would allow Russia to retain its EU market share, while Slovakia could avoid paying additional transit fees. European companies such as Slovakia’s gas utility, Slovensky Plynarensky Priemysel AS, and Hungary’s MOL are urging Ukraine to continue shipments.
The European Union is staying out of the negotiations, emphasizing that alternative energy sources are available and that the region’s gas storage levels are sufficient. In February, the EU plans to unveil a strategy to further phase out Russian fossil fuels. However, the bloc’s efforts to diversify energy supplies have been complicated by the fact that Russian liquefied natural gas (LNG) continues to be shipped to European ports in France, Belgium, and Spain.
European gas prices have risen 48% this year due to the prospect of supply cuts and unusually cold, windless weather. While prices remain below the 2022 peaks, they are still high enough to impact households and manufacturers. The cessation of Russian gas transit through Ukraine could exacerbate this situation, with Slovakia estimating that it would add €120 billion ($125 billion) in energy costs for the EU over the next two years.
Alternative solutions are being explored, including discussions between Slovakia and Azerbaijan to source Azeri gas. Hungarian Prime Minister Viktor Orban has proposed shifting the point of Russian gas sales to the Russia-Ukraine border, transferring responsibility to European buyers. Putin has acknowledged such proposals but warned that implementing them would be difficult due to Gazprom’s long-term contracts.
Ultimately, allowing Russian gas to transit through Ukraine undermines the EU’s message of distancing itself from Putin’s regime. It could create divisions within the EU while benefiting Russia. As Benjamin L. Schmitt, senior fellow at the CEPA think tank, noted, the stakes are high. Any continuation of Russian gas transit, under any guise, would be dangerous for Ukraine and counterproductive to the EU’s long-term energy goals.
