No More Russian Gas Through Ukraine – But What Happens Next?

On Jan. 1, Ukraine halted the transit of Russian gas to Europe through the Druzhba, Soyuz and Yamal-Yevropa pipelines. The names of these pipelines – drawn from Soviet-era words meaning “friendship”, “union” or “brotherhood” – are, in all their irony, the remnants of a 60-year-old gas transit friendship.

Until any new deals are made, most gas flowing through Ukrainian pipelines, aside from a tiny share of imports from Hungary and Moldova, will be Ukraine-produced gas.

“Compared to the volumes of Russian gas we used to transport – over 40 million cubic meters per day – the current imports, fluctuating at around one million cubic meters, are insignificant figures,” Mykhailo Svyshcho, natural gas market observer at ExPro Consulting, told Kyiv Post.

Russia’s strategy to weaponize gas supplies appears to have backfired, causing losses for its state-owned gas giant Gazprom. For its part, Europe has switched to Norwegian gas and liquefied natural gas (LNG), though it has not entirely given up its dependence on Russian LNG.

The Ukrainian gas transport system currently appears to be operating well, although Ukraine could be about to face financial and human capital losses in the gas transport system, making it important to update its sector strategy quickly.

What next for Ukraine?

The last 41 million cubic meters of Russian gas flowed through Ukrainian pipelines on Dec. 31, 2024, according to Gas Transmission System Operator of Ukraine (GTS) data.

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That was only a minority of the total flow, with 110 million cubic meters of Ukrainian domestically produced gas also transported in the system, keeping it busy.

Kyiv Post previously reported that Ukraine produced 13.9 billion cubic meters of commercial gas in 2024, and 13.2 billion cubic meters (466 billion cubic feet) in 2023. Ekonomichna Pravda wrote that, thanks to warmer weather and reduced consumption, it was enough for the winter of 2023-2024 without relying on Russian gas imports.

Fewer transmission facilities will now be needed for gas transportation. Some 32 compressor stations have been closed according to Svyshcho, although they can apparently be restarted if necessary.

A key risk is that of layoffs among staff involved in the maintenance of closed compressor stations. To avoid this, according to Svyshcho, Ukraine’s government should optimize the network and decide which routes and sections of the gas transport system to use. He also believes that GTS Operator should purchase technical gas to maintain volumes of transit and keep facilities working.

“Maintaining the entire workforce, all these compressor stations, and the entire infrastructure when no transit is planned, is simply impractical,” he said.

The absence of a major importer could jeopardize GTS Operator revenues since gas transit was the primary source of income for the state-owned company before 2025.

In 2023, GTS Operator earned Hr. 36 billion ($925 million) in sales and Hr.11.3 billion ($290 million) in net revenues, according to the company’s financial statements for 2023 in an analytical system YouControl. Whilst financial statements for 2024 are not yet finalized, GTS Operator expects Hr.42.1 billion ($1 billion) in sales and Hr.17.6 billion ($419 million) for the last year.

But now, without Russian transit, GTS Operator is expected to earn only half this amount, leaving almost zero net profits, GTS Operator CEO Dmytro Lyppa said during parliamentary hearings on Thursday.

“We can use [transportation systems] for future exports as soon as we increase domestic gas production at adequate volumes, ex-CEO of GTS Operator Serhii Makohon told Kyiv Post. “There is also biomethane and hydrogen,” Makohon added,

The Carnegie Russia Eurasia Center in Berlin stated that Ukraine does not import much gas because “Ukrainian industry and gas-fired power generation were largely destroyed during the war.”

The gas-fired power plants – yes, but the gas industry – no. Ukraine’s gas storage facilities are located in regions that have suffered less damage and fewer strikes, despite the aggressor’s best attempts.

“The vast majority of storage facilities – 11 out of 13 – are located in the western and northern parts of Ukraine (94% of total storage capacity, i.e. just over 30 bcm of natural gas),” the Institute of Central Europe wrote.

According to Kyiv Post sources, the war risk represents a key “stop sign” for foreign investors. Ukraine has the lowest tariffs for gas storage in Europe, but it may only be of interest to Western traders after the war ends, Makohon said.

There is a so-called vertical gas corridor where gas can be transported through Romania and Moldova which can be used for this purpose.

What next for Russia?

Due to losing the European market, Russia’s Gazprom reported $7 billion in losses in 2023, Radio Liberty wrote. These are the first negative financial results for the state-owned giant since 1999.

Russia will lose approximately $6.5 billion in annual profits, according to former Assistant to the Secretary of Defense for Public Affairs John Kirby. The Carnegie Russia Eurasia Center paints a more optimistic picture, suggesting that Gazprom will lose merely 10% of revenues and less than half of gas segment business volumes.

The Russian state giant has already refocused on other markets.

“In 2025, Gazprom will export 38 billion cubic meters to China, about 25 billion cubic meters to Turkey, and 15 billion cubic meters to Europe via Turkish Stream through the Black Sea… Ukrainian transit would make up about 16% of this export portfolio. The volume is noticeable, but not fundamental,” the Carnegie Russia Eurasia Center wrote.

Fundamental or not, Gazprom is set to lay off 1,600 out of 4,100 staff in its St. Petersburg central office, as recently reported by Kyiv Post.

What’s next for Europe?

The European Commission had been preparing to unplug from Russian gas for more than a year, the institution told Suspilne earlier this month. Its key tool to solve the problem is LNG.

“European gas infrastructure is sufficiently flexible to ensure the supply of non-Russian gas to Central and Eastern European countries via alternative routes,” the EU Commission wrote in reply to Suspilne’s enquiry.

Hungary and Slovakia procrastinated over alternative sources, blaming Ukraine for the transit halt. Slovakia’s Prime Minister Robert Fico said that Ukraine’s cessation of Russian gas transportation has cost it €500 million in transit fees and €1 billion in higher gas prices, EUActiv reported.

Fico also previously threatened to cut electricity flows to Ukraine and reduce aid for its refugees. But on Jan. 8, he announced that Slovakia had secured a deal with Russian President Vladimir Putin to obtain gas from Russia through Hungary.

Moldova has unplugged its gas from Russia but will need to solve a problem with Gazprom completely cutting the gas from Transnistria due to an alleged debt.

But for the EU, unplugging from Russian gas has not meant completely unplugging from Russian LNG.

The European Union’s 27 countries imported 837,300 metric tons of LNG from Russia in the first 15 days of 2025.

“That marks a record high, up from the 760,100 tons brought in during the same period last year, fueling concerns that Western nations aren’t doing enough to squeeze Russian funds as Moscow’s war enters its fourth year,” according to Politico.

Russia is the second largest supplier to Europe after the US, Ukrainian energy think tank Dixi Group estimated. Most of it is bought by Spain, Belgium and France, delivering monthly profits of $1 billion.

Europe has already suffered from oil price hikes that spiked Eurozone inflation and an economic shock after Russia invaded Ukraine in 2022. Can such a dependence again bring Russian economic weapons to the EU? Time will show.

Can anywhere else replace Russian supply?

Azerbaijan plans to increase gas production at the Absheron field from 1.5 billion to 5 billion cubic meters annually and to extract the first so-called deep gas from the Azeri-Chirag-Gunashli field in 2025, Kyiv Post previously wrote.

It represents a possible substitute, but Azerbaijani’s capacities are not sufficiently well-developed to produce the amount of gas Europe needs, Svyshcho told Kyiv Post,

“Azerbaijan supplies 12 billion cubic meters – compare it to 15 billion transported through Ukraine in 2024. That is almost as much as Russia transported through Ukraine. It is quite significant,” he said.

Algeria, Qatar and Libya supply 10% of the total volumes of LNG being delivered to Europe, but Svyshcho noted that they have no plans to increase supply.

Perhaps US President Donald Trumps’s mantra to “drill baby drill,” and recent statements about forcing a decrease to oil prices may put an end to Russia’s energy weaponization?