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The end of Europe’s reliance on Russian gas transit marks a paradigm shift in global energy dynamics, as Europe shifts to LNG imports from the US and Qatar and prepares itself for an energy-independent future
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The cessation of Russian gas transit marks a profound shift in the geopolitical landscape of Europe. For decades, Russian gas pipelines were not just conduits of energy but also instruments of influence, shaping the contours of European energy policy and diplomacy. The flow of Russian gas to Europe represented a delicate balance of energy security and political leverage, highlighting their deep interdependence.
As the taps are turned off, Europe faces a new reality, one where the absence of Russian gas forces a re-evaluation of its energy strategies and alliances. This transition is fraught with challenges as nations navigate the uncertainties of securing alternative energy sources while maintaining economic stability. The end of this era signifies more than just a change in energy supply; it heralds a new chapter in European geopolitics, where the quest for energy independence and diversification becomes paramount. This signals the need for resilience and innovation in the face of a transformed energy landscape.
For over 40 years, the gas transit deal between Russia and Ukraine was central to Europe's energy framework. Established during the erstwhile Soviet era, the Urengoy-Pomary-Uzhgorod pipeline, also known as the Brotherhood pipeline, had been transporting natural gas from Siberia to Europe via Ukraine since it became operational in the early 1980s. This deal ensured Europe a steady energy supply while providing Russia with significant revenue and geopolitical influence.
However, the five-year agreement, renewed multiple times, expired on 31 December 2024 without a new arrangement in sight due to the ongoing Russia-Ukraine conflict. This marks the end of a critical chapter in Europe-Russia energy ties.
Since 2022, the European Union (EU) has actively diversified its energy sources to reduce its dependence on Russian gas, accelerating its efforts with the deal's end.
The cessation of Ukrainian gas transit has profound implications for Europe's energy security. Since 2022, the European Union (EU) has actively diversified its energy sources to reduce its dependence on Russian gas, accelerating its efforts with the deal's end. Countries like Slovakia and Austria have secured alternative supplies, while the EU has significantly increased its liquefied natural gas (LNG) imports from the United States (US), Qatar, and Norway. This shift signals a pivotal transformation in Europe’s energy strategy amid evolving geopolitical challenges.
The expiration of the Russia- Ukraine gas transit deal reflects deep geopolitical tensions fuelled by the ongoing conflict. The deal unravelled as relations soured following Russia's 2014 annexation of Crimea and the 2022 invasion of Ukraine.
Ukraine’s refusal to renew the deal strategically cuts off a major Russian revenue stream, hindering its military funding. Simultaneously, Europe has accelerated efforts to reduce its reliance on Russian energy, aligning with its broader energy diversification goals.
The deal’s end marks a pivotal geopolitical shift, diminishing Russia's energy leverage over Europe while reinforcing Ukraine’s economic and political independence. This realignment is reshaping energy dynamics across the region.
The expiration of the Ukraine-Russia gas transit deal has forced Europe to address a significant energy gap. Russia’s dominance in Europe’s gas market, once at 35 percent, has plummeted to 8 percent. As of 1 December 2024, Russian gas delivered via Ukraine fell below 14 billion cubic meters (bcm), a sharp decline from 65 bcm/year at the start of the 2020 contract.
To adapt, Europe has significantly increased LNG imports from the US, Qatar, and Norway. Norway delivered 87.8 bcm of gas in 2023, accounting for 30.3 percent of total imports, while the US supplied 56.2 bcm (19.4 percent). The US has also been Europe’s top LNG supplier for three years, accounting for 48 percent (200 million cubic metres/day) of LNG imports in 2023. To support diversification, Europe’s LNG regasification capacity is set to reach 829.7 mcm/d in 2024, a 33 percent rise since 2021.
The EU's renewable electricity generation rose sharply in 2023, driving a notable reduction in energy-related CO2 emissions.
Simultaneously, Europe is accelerating its renewable energy investments. In 2023, member states added 60 gigawatts (GW) of solar PV (photovoltaics) and 15 GW of wind capacity. Heat pump sales are projected to grow from 25 GW to over 45 GW annually by 2030. The EU's renewable electricity generation rose sharply in 2023, driving a notable reduction in energy-related CO2 emissions. By 2030, under the International Energy Agency's Stated Policies Scenario, the EU’s oil demand is expected to drop by 15 percent, natural gas by 10 percent, and coal by nearly 50 percent, with renewables projected to generate 80 percent of electricity.
Efforts to diversify energy sources have dramatically reduced the dependence on Russian gas, cutting its share from 40 percent in 2021 to under 10 percent today. Meanwhile, LNG now accounts for over 40 percent of EU gas imports. The EU’s Net Zero Industry Act aims for 40 percent self-reliance in clean energy deployment by 2030, reinforcing its commitment to carbon neutrality by 2050. However, balancing LNG dependency with decarbonisation goals poses challenges, as infrastructure for LNG and renewables requires substantial investment. Europe’s energy future depends on navigating these complexities to ensure both sustainability and stability.
The termination of the Russia-Ukraine gas transit deal carries significant economic and political ramifications.
For Ukraine, it means losing US$1 billion annually in transit fees, a critical blow amid the economic toll of its ongoing conflict with Russia. However, the move strategically aims to weaken Russia’s ability to fund its war efforts.
The loss of one of its two remaining pipeline routes to Europe undermines Russia’s influence over its largest energy market.
Russia faces a far greater financial setback, with revenue losses estimated at US$6 billion annually. Gazprom, its state-owned gas company, previously earned US$5 billion per year from gas sales to Europe via Ukraine. The loss of one of its two remaining pipeline routes to Europe undermines Russia’s influence over its largest energy market.
Coupled with sanctions and declining global energy demand, these losses deepen Russia’s economic challenges and erode its geopolitical leverage.
The expiration of the Russia-Ukraine gas transit deal has profound geopolitical implications, creating new winners in the global energy landscape.
The US emerges as a major beneficiary, bolstering its LNG exports to Europe and enhancing both economic ties and geopolitical influence. Akin to this, India capitalised on discounted Russian oil, positioning itself as a significant beneficiary of the shifting energy dynamics.
Similarly, Qatar, with its vast LNG reserves and strategic infrastructure, stands poised to solidify its position as a reliable alternative energy supplier for Europe, reducing the continent's dependency on Russian gas.
The end of the transit deal marks a pivotal moment, with the US, Qatar, and renewables shaping a new era of global energy geopolitics.
Europe is also accelerating its transition to renewable energy, increasing its investments in solar, wind, and hydroelectric power to enhance energy security and sustainability. This shift addresses immediate needs while aligning with long-term environmental goals.
However, the transition poses challenges, including high adaptation costs and the complexities of developing new infrastructure. The end of the transit deal marks a pivotal moment, with the US, Qatar, and renewables shaping a new era of global energy geopolitics.
The end of Russian gas transit signals a seismic shift in Europe’s energy and geopolitical landscape, closing a chapter of reliance and opening one of resilience. As Europe pivots toward LNG imports and renewable energy investments, it faces the dual challenge of ensuring energy security while advancing decarbonisation goals. This transition, though fraught with complexities, also presents an opportunity to redefine global energy dynamics, with nations like the US and Qatar emerging as key players. Ultimately, Europe's ability to navigate this transformation will not only shape its energy future but also set a precedent for balancing sustainability with stability in a rapidly changing world.
Manish Vaid is a Junior Fellow at the Observer Research Foundation.
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Manish Vaid is a Junior Fellow at ORF. His research focuses on energy issues, geopolitics, crossborder energy and regional trade (including FTAs), climate change, migration, ...
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