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With the end of the long-standing arrangement of Russian gas transit, many European countries are facing a complicated situation due to the lack of alternative options that could assure enough supplies. At the time, while Ukraine’s authorities celebrated the cessation of the gas transit as a momentous occurrence, suggesting it would impact Russia’s financial resources and military capabilities, other governments in the European Union were worried for their energy security. Slovakia and Hungary, whose current prime ministers, Robert Fico and Viktor Orban, are considered the most friendly in the EU towards the Kremlin, have criticised this development, whilst other EU members, including Poland, have expressed support for Kiev.

In this context, we have to remember that after Moscow’s decision to invade Ukraine, on 24 February 2022, the percentage of Russian gas imported by the EU states started to reduce, and in 2023, Russian gas constituted less than 10 percent of EU gas imports. This marks a significant difference from over 40 percent of the period before the war, even though some EU member states, especially in Eastern Europe, still rely heavily on energy imports from Russia. At the moment, unlike Slovakia, Hungary remains largely unaffected by the suspension of the gas transit on Ukrainian territory, as the country receives its supplies from Russia primarily through the Black Sea pipeline via Turkey and the Balkans. It comes not as a surprise that Ukraine criticised those countries that still continue to purchase hydrocarbons from Moscow, even during the conflict, arguing that in this way they are financing Russia’s military actions.

Revenues from gas and oil are clearly vital for the Russian economy and stability after almost three years of enduring war and growing isolation on the global stage. Moscow partially managed to redirect its exports towards China and other markets, trying to escape Western sanctions, but the contracts signed with the Asian counterparts do not have the same economic value as those signed with the EU member states in the past. In the final weeks of 2024, Russian energy giant Gazprom also announced the suspension of gas supplies to Moldova, starting from January 1, 2025. This decision prompted a state of emergency in Chisinau regarding power supplies in the nation. Until the end of last year, in fact, Moldova received gas through the Russian-backed separatist region of Transnistria, while Moldova’s electricity primarily comes from a Transnistria-based power station that uses Russian gas.

For the rest of the European Union, at present there is a significant discrepancy between the reassurances of the institutions in Brussels and the markets’ reaction, where European gas futures have reached the highest prices since October 2023. Even if the EU insists that there is no longer a dependency on Russian gas, it looks like the general sentiment among operators is hardly on the same note. Many of the operators, in fact, do not believe that between now and 2027—when the EU is set to completely abandon Russian gas supplies—the situation could be considered under full control of Brussels. Thus, although we can predict that there will be no shortages of gas for essential services in Europe, it is naive not to consider the future impact of high prices for natural gas for next summer.

Written by: Francesco Marino