On January 1, 2025, Ukraine took a historic step by ceasing the transit of Russian gas through its territory - a step that sets the stage for the end of Russian energy dominance in the European market and significantly improving both Ukraine's and Europe's energy security.
Mykhailo Gonchar, President of the Centre for Global Studies "Strategy XXI," tells UkraineWorld the importance of this decision, why it poses no threat to Europe, and how Russia managed to entangle Europe into its energy dependency, using gas as a tool of political leverage.
Russia generates significant revenue to sustain its aggression against Ukraine through the export of goods and services, with energy resources playing a central role. In the face of Russia's full-scale invasion, one of Ukraine's primary objectives in the economic dimension of its resistance has been to restrict the inflow of funds into Russia's budget. In this context, halting gas transit is a logical and necessary step as Gazprom earned approximately $6 billion annually from this pipeline alone.
Why, then, did Ukraine not take this step sooner - immediately after the full-scale invasion began in 2022? The answer lies in Ukraine's determination to act as a trusted international partner. An abrupt gas cutoff would have posed problems for its European allies. And so, Ukraine actually upheld its contractual obligations under the 2019 transit agreement, which expired on January 1, 2025. Thus, Ukraine both honoured its international obligations while providing its European partners with plenty of time to prepare for the upcoming transit halt.
Ukraine previously earned hefty revenues from gas transit - around $3 billion annually at the peak of transit volumes in the 2000s (before the construction of Nord Stream). However, even then, this income was far from being "critical for the budget," as was occasionally suggested in some Western media. For comparison, Ukraine's revenue from steel exports in 2008 amounted to approximately $26.5 billion. More recently, Naftogaz's income from transit has not exceeded $800 million annually.
Some EU members, particularly Central European countries like Slovakia - major consumers of Russian gas - attempted to stoke fears that halting transit through Ukraine would trigger an energy crisis in Europe. However, these concerns were largely unfounded. Such speculations were likely fuelled by Moscow as part of its strategy to maintain influence. In reality, no collapse occurred - and none is expected.
Central European countries had already prepared for potential disruptions during previous gas crises and through broader EU-level initiatives. Europe has systematically worked to enhance its energy security by reducing dependence on Russian gas and developing alternative solutions. The European Commission repeatedly emphasised that stopping Russian gas transit through Ukraine would have only a minimal impact on the European gas market.
Significant investments in infrastructure have bolstered Europe's energy resilience. Interconnectors now link Central European countries such as Slovakia, the Czech Republic, Austria, Hungary, and Poland, while underground gas storage capacities have been significantly expanded. Although gas prices may temporarily rise - a predictable and logical response - they are expected to stabilise in the near future. Additionally, clear statements from U.S. President-elect Donald Trump regarding plans to lift restrictions on shale gas drilling have strengthened the competitive landscape. The growing availability of liquefied natural gas (LNG) imports will further diminish Russian gas's influence in the market.
Europe is steadily and successfully weaning itself off its dependence on Russian energy, thereby bolstering its security. But how did Russia entangle Europe in this dependency in the first place?
Europe's dependency on Russian gas dates back to the Cold War
. At the time, the Soviet Union recognised that it was losing to the "United West" - namely, the transatlantic community comprising North America and Western Europe. Alongside the European front of the Cold War, deteriorating China-Soviet relations opened a new Chinese front
. In this context, the USSR had to pursue a policy of détente while simultaneously seeking ways to weaken the West indirectly.
The Soviet strategy envisioned making Western Europe more aligned with the USSR through energy exports, primarily oil and gas. This strategy sought to incentivise Western European businesses, especially those in West Germany, to exert influence on their governments, steering their policies eastward. The ultimate goal was to create cracks in transatlantic relations between North America and Western Europe.
Economically, the Soviet Union faced an urgent need for foreign currency to purchase modern equipment for machinery and military production and to import food to alleviate domestic shortages. At the same time, Western Europe needed reliable energy resources to fuel its growing economy. The short logistical distance between Europe and Soviet oil and gas fields made Soviet energy an attractive option.
Thus, the "gas-for-pipes" strategy
was born. The USSR supplied gas to Western Europe in exchange for high-quality pipelines and equipment that it could not produce domestically.
Declassified archives from the 2010s revealed detailed Soviet strategies
, including a memo from the Soviet Foreign Minister to the Communist Party Central Committee. The document outlined how gas contracts with West Germany
could make the country more receptive to Soviet positions, rendering a critical sector of West Germany's economy - energy - dependent on the Soviet Union. From the late 1960s until the very collapse of the USSR, this dual-purpose strategy was in full swing, earning the USSR much-needed hard currency while expanding its political influence.
In Central Europe
, which was within the Soviet sphere of influence, the supply of oil and gas began as early as the 1950s. By 1967, a pipeline had been constructed to Czechoslovakia, and in 1968 it was extended from Bratislava to Vienna. Austria's national oil and gas company signed the first contract for the delivery of Soviet gas, which, in fact, was Ukrainian gas
. These gas agreements lasted until November 2024.
For a long time, European countries failed to recognise the risks of dependency on Russian energy sources. The dominant perspective was narrowly business-focused: "It's just business, a mutually beneficial arrangement. Russia supplies us with gas, and in return, they receive the currency they need. Yes, we depend on them, but they depend on us too." This mindset dismissed warnings from Ukraine, the Baltic states, and Poland about Russia's potential threats, reducing them to perceived exaggerations.
For Ukraine, however, the dangers of energy dependence on Russia were for many years clear. As early as 2006, Russia used gas as a weapon
, cutting supplies to Ukraine and partially halting transit to Europe. Evidence that gas pipelines were not merely infrastructure but instruments of political coercion. At the time, European media portrayed the crisis as a business dispute between Russian and Ukrainian oligarchs, ignoring its broader geopolitical implications. When Ukrainians warned that Russia was weaponising gas to exert political pressure, these concerns were met with skepticism.
The situation escalated in 2009, when Russia not only halted gas supplies to Ukraine but also completely stopped transit to Europe through Ukrainian pipelines.
For Ukrainians, this was yet another confirmation of Russia's use of gas as a weapon. Europeans, however, continued to frame the crisis as a bilateral issue between Russia and Ukraine. This narrative worked to Russia's advantage, allowing it to deflect responsibility and maintain leverage over Europe.
The situation changed dramatically with Russia's aggression against Ukraine in 2014. Following the annexation of Crimea and the onset of the invasion of Donetsk and Luhansk Oblasts, Russia ceased gas supplies to Ukraine in mid-June 2014, citing chaos and unpaid bills as pretexts. This compelled Ukraine to take decisive steps to eliminate its reliance on Russian gas.
By November 25, 2015, Ukraine imported its last cubic metre of Russian gas directly from Gazprom. Since then, the country has relied exclusively on reverse flows from Europe, facilitated by the European Commission.
Russian propaganda sought to amplify fears that Ukraine would not survive without Russian gas or transit fees, predicting an economic collapse. Yet, as evidenced since 2015, Ukraine coped without direct Russian gas supplies.
The full-scale invasion in 2022 further transformed the issue of Russian weaponising gas. With its decision to invade, Russia undermined itself. In normal circumstances, that is if the war wasn't launched, transit would have likely continued: Russia would have continued to earn revenue from gas sales in Europe and beyond, all the while Ukraine would have benefited, income wise,from ensuring transit.
However, Gazprom also failed to pay Ukraine in full for transit under the 2019 contract, prompting Naftogaz to file for arbitration in 2022. The case is currently under review in a Swiss arbitration court.
Gazprom's only remaining route for gas supplies to Europe is the second string of the TurkStream pipeline. While additional capacities such as the Yamal-Europe pipeline through Belarus and Poland or the surviving string of Nord Stream 2 exist, they remain unusable after 2022. TurkStream operates at full capacity, leaving little room for expansion - adding just a few billion cubic metres would make little impact.
Russia's strategy of using energy sources as a tool of geopolitical leverage seemed to work for a long time. At its peak, it covered 46% of Europe's total gas needs and 55% of Germany's needs alone. However, recent events have shown that this dependency can be quickly reduced.
The end of Ukrainian transit for Russian gas signals a turning point in Ukraine's history and Russia's long influence on European politics. It reflects the shrinking role of Russian energy supply in Europe and highlights the European energy market's ability to adapt given its willingness to diversify its energy sources and gain independence from Russian supplies.
MYKHAILO GONCHAR, President of the Centre for Global Studies "Strategy XXI"
Interviewed by ANASTASIIA HERASYMCHUK, Deputy Editor-in-Chief at UkraineWorld
