By Nina Bachkatov
President Zelensky hailed as “historic” the cessation of Russian gas exports through Ukraine on January 1. The five-year transit contract, signed at the end of 2019, had been maintained even after Russia’s invasion, as Ukraine sought to “demonstrate its reliability as a partner to Europe”. On 19st December 2024, President Zelensky confirmed that the contract would not be renewed, stating it was a move aimed at undermining Russia’s war effort. However, he said little about the potential economic consequences for Ukraine, including the loss of transit fees, the inability to siphon deliveries en route to the EU as in the past, and the heightened risk of Russian attacks on pipeline infrastructure. He also categorically ruled out transporting Russian gas disguised as Azerbaijani via Ukrainian pipelines.
The word “historic” is often overused to the point of losing meaning. Yet the interruption of the last pipeline delivering Russian gas to EU countries through neighbouring territories does signify the end of a key chapter in the post-Soviet energy relationship. This relationship, forged since 1992, was shaped by several factors: the centrality of energy to the economic sustainability of former Soviet states, geographical dependencies, the interoperability of Soviet-era infrastructure, and Moscow’s consistent efforts to use energy as a lever to assert influence over its “near abroad.”
Shifting Energy Diplomacy
Russia’s “energy diplomacy” has taken various forms depending on whether its partners were energy producers or transit states, with interactions marked by frequent negotiations over prices, transit fees, abandoned or newly constructed infrastructure, blockades, and crises. This approach blended economic and political objectives, which evolved over time. Under Boris Yeltsin, Russian energy was supplied at heavily discounted rates to foster Commonwealth of Independent States (CIS) cohesion. Vladimir Putin, however, pursued a “realist” policy, moving towards market-based pricing. Some Russian analysts characterised Putin’s approach to relations with neighbours like Belarus, Ukraine, and Georgia as a “no more than calculated management of transit corridors for gas and oil”
By 2005, during the CIS summit in Kazan, Russian officials explicitly stated that post-Soviet states could pursue NATO or EU integration, but should expect an end to preferential energy tariffs. This shift coincided with the “colour revolutions” that brought pro-Western governments to power in Georgia and Ukraine. In response, Ukrainian President Viktor Yushchenko sought to recalibrate the power dynamic by renegotiating Russian energy prices in exchange for higher transit fees. This led to the 2005-2006 “gas wars” between the two nations. Russia framed the dispute as a commercial issue, while Ukraine viewed it as a geopolitical matter, part of its broader reorientation toward the West.
The Crimean Factor
The annexation of Crimea in 2014 added a significant new dimension to these energy disputes. Since Ukraine’s independence, disputes over energy tariffs and the presence of Russia’s fleet in Crimea have been central to both bilateral relations and domestic politics. Negotiations over energy deliveries were not only a question of prices, being intertwined with agreements on the conditions for Russia’s Black Sea Fleet to “rent” the port of Sevastopol.
What began as a source of internal political contention in Ukraine—where oligarchs built fortunes on gas distribution —ultimately escalated into a geopolitical crisis. The 1st January 2025 pipeline shutdown can thus be seen as the culmination of this long saga.
In that way it was “historic”, because this severing of energy ties reflects broader shifts in the geopolitical map of the former Soviet Union. It ended as it started, after years during which both Russia and Ukraine approached successive crises in ways that were often emotionally charged, leading to decisions that defied rational economic or strategic logic.
Winners and Losers
As with any “historic” event, there are clear winners and losers. For Ukraine, the pipeline shutdown represents another step in its integration with the European community and its detachment from Russia. While the loss of transit revenue and the higher costs of European energy will strain Ukraine’s economy, Western financial aid should mitigate the impact. The European Union, for its part, now has stronger arguments to justify its ongoing support for Ukraine “for as long as it takes,” despite signs of “Ukraine fatigue” in some quarters.
Meanwhile, the European Commission has deflected blame for rising electricity prices in Slovakia and Hungary onto those governments, accusing them of failing to diversify energy supplies rather than cutting deals with Moscow to prolong gas deliveries.
Collateral Damage in Moldova
The ripple effects are being felt in Moldova, where the frozen conflict in Transdniestria is exacerbated by the energy crisis this winter. No gas is now being delivered through Ukraine to the breakaway region, which was totally dependent on these Russian supplies. Transdniestria’s power station, which produces three-quarters of Moldova’s electricity, is struggling to meet demand. The region’s massive metal factory has shut down, possibly permanently, and priority is being given to civilian energy needs. Moldova’s national distributor decided sharp electricity price hikes, and discussions are underway about importing coal to stabilise energy production.
This latest chapter in the energy saga underscores the deep interconnection between energy and geopolitics in the region. For Ukraine and its allies, the pipeline’s closure may represent a symbolic victory, but it comes at a significant economic and strategic cost.
For more background see Nina Bachkatov, “L’énergie diplomate. Enjeux et effets de la diplomatie énergétique de la Fédération de Russie », ed. Bruylant, 2012