San Francisco Frontiers - Moscow, Kyiv end Russian gas transit to Europe via Ukraine

Russian gas has been supplied to Europe via pipelines crossing Ukraine since the end of the Soviet Union in 1991 in an arrangement that earned revenues for Moscow from the gas and for Kyiv from the transit fees.

The latest transit contract expired on Wednesday, with Ukraine opting not to extend the deal following Russia's 2022 invasion.

Kyiv hailed the end of Russian gas transit as a "historic event," and said it would deal a blow to Russia's finances and its war machine.

But Moscow casts it as Ukraine shooting itself in the foot and frustrating its partners in eastern Europe that used to rely on Russian supplies.

Russian gas accounted for less than 10 percent of the European Union's gas imports in 2023 -- down from more than 40 percent before the war.

But some EU members, mostly in the east, which was under Moscow influence during Soviet times, still depend heavily on Russian gas for geographical and political reasons.

- 'Historic event' -

"We have stopped the transit of Russian gas," Ukraine's Energy Minister German Galushchenko said in a statement on Wednesday, calling it "a historical event."

"Russia is losing its markets, it will suffer financial losses," he added.

Russia's Gazprom energy giant said in a separate statement that "Russian gas has not been supplied for transit via Ukraine since 8:00 am (0500 GMT)".

It said it had lost the "technical and legal right" to ship its gas across Ukraine to Europe.

European natural gas prices climbed above 50 euros ($51.78) per megawatt hour for the first time in over a year on Tuesday as buyers in Eastern Europe braced for the halt in supplies.

EU and NATO members Hungary and Slovakia have maintained close ties with the Kremlin despite the invasion.

The halt in Russian gas transit through Ukraine will force some countries to dip deeper into their reserves and seek to import more liquefied natural gas (LNG).

But Hungary is set to be largely unaffected by the move, as it receives most of its Russian gas via the Black Sea pipeline, an alternative route that bypasses Ukraine by running via Turkey and up through the Balkans.

Brussels has downplayed the impact the loss of Russian gas supply will have on the 27-member bloc.

"The Commission has been working for more than a year specifically on preparing for a scenario without Russian gas transiting via Ukraine," it told AFP on Tuesday.

Kyiv has railed against countries that continue to buy Russian oil and gas amid the invasion, accusing them of funding Russia's invasion.

Energy revenues are crucial to Russia's government finances.

Facing Western sanctions and pressure to cut purchases, Moscow has reorientated its lucrative exports away from the West towards Asia.

In a separate dispute over payments, Gazprom also said it would halt gas supplies to Moldova on Wednesday and Chisinau has introduced a state of emergency over possible power supplies.

Russia supplies Moldova with gas piped to the breakaway region of Transnistria, backed by Russia.

The country gets most of its electricity from a power station based in Transnistria that uses Russian gas.

W.Thompson--SFF