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January 4, 2025 - 1:00pm
Russian gas deliveries via Ukraine finally came to a halt on 1 January, some 1,042 days after Vladimir Putin launched his full-scale invasion. The end of gas deliveries through the Urengoy–Pomary–Uzhhorod pipeline came after Ukrainian President Volodymyr Zelensky refused to countenance any possible extension, including a much-hyped gas swap between Russia and Azerbaijan.
What is most notable about the move is just how little it has impacted European gas prices. It was, of course, less than two years ago that Europe suffered an energy crisis triggered by collapsing Russian gas deliveries, the key driver of subsequent inflation. At the time, Putin wielded the energy weapon against the European Union by toggling off gas supplies via Nord Stream — before its destruction — and forcing a halt to deliveries through Ukraine’s other major pipeline. But the impact on gas prices from the latest cancellation has been comparatively muted.
The halt marks a major loss for Russia, with its gas giant Gazprom set to lose around $5 billion annually, nearly 5% of its 2024 federal revenues from oil and gas sales. Yet there are significant losers elsewhere in Europe, too. Hungary and Slovakia, in particular, risk losing substantial supplies from the 15 billion cubic metres (bcm) of gas that flowed through Ukraine annually in the last two years. That the governments of these countries are those which have most vocally supported the Kremlin’s position on the energy dispute — and called for Kyiv to accept Russian terms to start peace talks — is therefore no surprise.
Hungary has already adjusted by shifting the majority of its Russian gas imports via the sole remaining pipeline route delivering Russian gas into Europe: the sub-sea BlueStream and TurkStream pipelines to Turkey and from there via the BalkanStream pipeline through Bulgaria and Serbia. But the capacity for additional deliveries is strictly limited, and BalkanStream’s capacity is just half that of the Urengoy–Pomary–Uzhhorod pipeline.
The other big loser is Austria, although the political establishment is quite happy for the gas to stop. It has tried to freeze out the Russian-friendly Freedom Party (FPÖ) and the country’s location as the centre of numerous European gas networks has given it the confidence to handle the loss.
In addition to the Turkey-Balkan route, however, Russian gas supplies to Europe continue via another route: liquefied natural gas (LNG) deliveries. In contrast to the collapse of Russia’s piped gas exports, these supplies have increased notably since the Ukraine war. Already in 2023, they accounted for 6% of European gas imports, one-and-a-half times the amount supplied via the Urengoy–Pomary–Uzhhorod pipeline.
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SubscribeToo true. Mr. Hess with unerring perspicacity puts his needle on the neuralgic point. What could ever have possessed Europe to build its prosperity on a gas supplier with a reputation for reliability, who over decades of political upheaval and turmoil had never ever leveraged commercial gas supply agreements for political ends? Thank goodness we have luminaries of economic thought and political forward-thinking like Ursula von der Leyen to have shown up the silliness of that outmoded thinking.
Freedom and democracy, and not least free market liberalism disdain and reject long-term agreements, reliability, and price stability. Such concepts are for the weak. The nimble, agile economies thrive on volatility, uncertainty – they spell opportunity! Massive infrastructure investments without the assurance of long-term use may be bad for public debt, but public debt does not matter, the spending on construction and public money for private companies are what drive the only measure of public prosperity: stock price and executive bonuses.
So let us applaud this further step in economic suicide as a glorious manifestation of independence, strength, and a candle-lit future.
Freedom from whom? Europe has a perennial energy weakness, the Americans have weakened us further by blowing up Nordstream and poisoning relations with our main, reliable, energy provider. Now this hack from some CIA-Stand-in “institute” is disseminating propaganda from the belly of the beast about how us plebs should be thankful for the growing energy prices.
The fluctuations haven’t hit us yet because the midwits ruling over us have had over 3 years to prepare and lull us slowly into lower living standards (now we know the latency on EU decision making I suppose), but fret not, the reserves are already less than full and the winter appears to just be starting.
Germany is also rapidly deindustrializing as I type, so hurray for the green transition, I know the Unherd crowd loves that stuff.
The one thing he is right about is that we are now at the whims of other providers who are even less willing to do business with us at an advantageous rate than the Russians were and mutti ursula can’t even virtue signal about the moral superiority of the gulf states, shock and horror!
But worry not, our friends from freedomland are more than happy to sell as a quarter the amount we were getting from the Ruskies at 4-5 times the price, because they care so much for the wellbeing of the “free world”.
“…hurray for the green transition, I know the Unherd crowd loves that stuff.”
Where on earth do you get that idea from? You couldn’t be more wrong, and even the briefest reading of articles and comments would inform you otherwise.
If all you’re going to do – having subscribed – is troll other subscribers (as seems to be the fashion) then give yourself a break, and don’t waste your time.
If, however, you wish to contribute in an intelligent and meaningful way, go right ahead. You seem to have the potential for that, so rise to the challenge instead of lowering it.
You’re not the comment police. You don’t get to tell people what to post. M Lux is free to post as they please. This is Unherd after all.
It was a sarcastic aside to the only two comments on the article at the time of posting (they’re all the way at the bottom), regarding Russia haters who think it’s a good idea to destroy Europe’s economy for no discernible gain (unless they think moving closer to WW3 is somehow desirable).
I’m well aware of the general attitudes of writers and readers on this site, some of which will simultaneously mock anything green while cheering Europe’s energy starvation and subservience to the US – without realizing there might be a connection there somewhere.
Well, speaking as one of those commenters, I don’t advocate “destroying Europe’s economy”, but I certainly do think it is incumbent on the Free World to distance itself from trade with Russia, and to do whatever is practicable to weaken it. If it wasn’t obvious before, it must be now – Russia simply cannot be trusted to behave in a civilized manner (both in matters of trade, and generally).
“….the Americans have weakened us further by blowing up Nordstream and poisoning relations with our main, reliable, energy provider“. Oh, it was the Americans that blew up Nordstream? Glad we’ve cleared that up! I guess we owe them a beer for doing it!
It’s always we Americans and the CIA…NordStream 1 pipeline A still works, I’m pretty sure the other 3 pipes could have been fixed by now. The Dutch have plenty of nat gas in the field they shut down. Norway and Qatar provide gas to the EU…The EU could frack like we do here but oh the planet….all while China and India use record amounts of coal…I’d be happy to stop selling American LNG to Europe and leave NATO…I’m sure Putin is a friendly fellow. Plenty of other markets for LNG
Qatar has its own demands of Europe, and in late December made its strongest threat to date to curtail gas supplies if the EU does not roll back decarbonisation and workers’ rights regulations.
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I support Qatar! Only crazy idiots while bought a perfectly good product can demand that seller be fined 5 percent of his annual profit from sales to all customers for being unfaithful to his wife.
And meantime we all(except France) procrastinate over nuclear.
Mr Biden’s weaponisation of oil and gas has divided the world into East and West. Sort of like the Cold War, but larger. Now Russia is thoroughly annoyed, and firmly listed as an ‘enemy’, it is unlikely that normal trade will come back in less than 50 years. But East and West can live separately. It’s sensible really. Yes, it’s a shame about all the death and destruction in Ukraine, but there was no alternative, and I think it will turn out well in the end. And the US oil and arms companies have benefited financially. So I guess it’s ok. So long as nobody pulls the nuclear trigger.
“Now Russia is thoroughly annoyed, and firmly listed as an ‘enemy’, it is unlikely that normal trade will come back in less than 50 years“. Thank heavens for that! Sanity has prevailed! Anyone who thought Russia wasn’t the “enemy” is, as we say in Australia, “a few snaggers short of a barbie”.
Europe is going to need to ensure they are not going to be reliant on Russian gas supplies again, no matter what happens in the future. Russia can simply never be trusted.
Quite the reverse, contingency plans have long been made and implemented for when this should happen, and this process will continue to free Europe from Russian energy dependency