Russia just lost one of its weirdest wartime income streams

• Even while at war, Ukraine has been piping gas for Russia to European customers.
• But that arrangement, which dates back to the fall of the Soviet Union, has now expired.
• Russia was estimated to rake in $5 billion in 2024 from the gas transits, with Ukraine getting up to $1 billion.

Russia is no longer able to send natural gas to Europe through Ukraine’s pipelines after a five-year deal, struck before the war began, expired on Wednesday.

It marks the end of a long-standing arrangement that used Ukraine as a conduit for westbound Russian gas — an agreement that continued even as full-scale war broke out in 2022.

European countries that received that gas, such as Slovakia and Austria, were paying Russia for this energy. Reuters calculated in December that the Russian economy would earn about $5 billion in 2024 alone from piping gas through Ukraine.

Meanwhile, the news agency estimated that Kyiv stood to receive between $800 million to $1 billion over that year from collecting transit fees.

However, Ukraine has signaled for months that it planned to let the deal expire on January 1, 2025, and it’s now made good on that pledge.

“When Putin was presented with the Russian presidency more than 25 years ago, the annual gas transit through Ukraine to Europe totaled more than 130 billion cubic meters. Today, it equals 0,” wrote Ukrainian President Volodymyr Zelenskyy.

Ukraine’s energy minister, Herman Halushchenko, said the transit deal ceased due to national security reasons.

Russian gas conglomerate Gazprom confirmed on Wednesday that its energy flows through Ukraine had stopped, citing “repeated and explicit refusal of the Ukrainian side to extend these agreements.”

The now-defunct Ukrainian-Russian deal laid bare the complexities of the war and its political consequences in Europe, with European Union nations struggling to reduce their reliance on Russian energy even as they supplied arms to Ukraine and tried to sanction Moscow.

And as thousands died every week amid bitter fighting in Luhansk, Donetsk, Kharkiv, and Kursk, gas flowing through the same areas allowed both Kyiv and Moscow to profit off each other’s goods and facilities.

Ukraine has piped Russian gas to Europe since the fall of the Soviet Union in 1991, and energy customers initially expressed concerns that they wouldn’t be able to find an alternative supply in time if the deal expired.

Slovakia’s president, Robert Fico, criticized Kyiv’s decision in a New Year’s address, saying cutting off cheap Russian gas to Europe would create a “drastic impact” on EU nations but not hurt Russia.

Austria, on the other hand, cut ties with Gazprom in December, accusing Russia of blackmailing Austrian gas company OMV by using energy as a bargaining chip over European support of Ukraine.

Losing Austria as a customer was yet another blow to Moscow’s gas industry as Europe weans itself off its Russian energy supply.

The EU said in March that about 8% of its natural gas came from Russia in 2023, down from 40% in 2021.

Since the war began, the US and Norway have emerged as two of the biggest winners among natural gas suppliers. The EU said that gas purchases from the US in 2023 had tripled since 2021, filling nearly 20% of the union’s gas imports.

Some countries on the continent such as Hungary, an EU member led by a president who keeps close ties with Moscow, still have access to Russian gas through the TurkStream pipeline, which runs along the Black Sea to the Balkans.

Moldova, which is not an EU member state, and its separatist-controlled territory, Transnistria, are expected to be hit hard by the cessation of the Ukraine-Russia deal, with the country’s largest power plant historically reliant on Russian gas.