Russian gas flowed to many European countries I stopped by on New Year’s Day After Ukraine refused to renegotiate the transit agreement amid the war with Moscow.

Ukraine’s unwillingness to renew the five-year-old transit agreement is intended to deprive Russia of revenue that Moscow can use to finance its war, but the move is likely to create an energy crisis in Eastern Europe, while reducing Transnistria – a breakaway region of Moldova – Heat and hot water supply for households.

“It puts a final end to what was previously Russia’s dominance of the European Union energy market,” said Jonah Hall, Al Jazeera’s correspondent from the Ukrainian capital, Kiev. Before its invasion of Ukraine in 2022, Russia supplied about 35% of Europe’s natural gas exports via pipelines.

With the closure of Russia’s oldest gas route to Europe, which has been operating for more than 40 years, Russia’s share has diminished to less than 10%. Another gas pipeline passing through Türkiye still supplies gas to countries such as Hungary.

So, how will turning off the taps at the height of winter affect countries, especially in Eastern Europe, and what could happen next?

Why did the flow of Russian gas to Europe via Ukraine stop?

Russian energy giant Gazprom said on Wednesday that gas supplies to Europe were halted at 8am local time (05:00 GMT) after Ukraine’s state-owned oil and gas company Naftogaz refused to renew the latest five-year transit agreement.

On Wednesday, Ukrainian Energy Minister German Galoshenko said in a statement: “We have stopped the transit of Russian gas. This is a historic event. Russia is losing its markets and will suffer financial losses. Europe has already made the decision to abandon Russian gas.”

The latest contract was first signed in 2020 under which the transfer fee was paid to Ukraine. But Ukrainian President Volodymyr Zelensky warned that Kiev would not renew the transit agreement amid the ongoing war.

How much gas does Russia export to Europe?

Many European countries began to reduce their dependence on Russian gas after Moscow gas Invasion of Ukraine in February 2022.

At its peak, Moscow’s share of European gas imports was 35 percent, but it has fallen to about 8 percent.

The EU received less than 14 billion cubic meters of gas from Russia via Ukraine as of December 1, down from 65 billion cubic meters per year when the contract began in 2020.

The gas is sent via the Soviet-era Urengoy-Pomary-Uzhgorod pipeline from Siberia via Sudzha, a town in Russia’s Kursk region that is now under the control of the Ukrainian military. The gas is transported through Ukraine to Slovakia. There, the pipeline is divided into branches that carry supplies to the Czech Republic and Austria.

The transit deal generated financial returns for both Russia and Ukraine.

Ukrainian media quoted Serhiy McCohon, the former head of the Ukrainian GTS operator, as estimating that Russia made a much larger sum from the transit deal than Ukraine did.

McCohon estimated that Russia’s income amounts to five billion dollars annually, a figure also reported by Reuters. On the other hand, Ukraine was receiving $800 million annually, “but most of this money is spent on the transit itself.” [Ukraine’s] The treasury receives between $100 million and $200 million in taxes and profits, McCohn was quoted as saying by Ukrainska Pravda newspaper.

Bloomberg estimated that Russia’s profits from the deal are even higher, amounting to $6.5 billion annually.

Will there be a shortage of electricity? Who will be affected by this?

Austria, Slovakia and Moldova relied on the transit route for their energy supply.

Austria received most of its gas needs from Russia via Ukraine, while Slovakia received about 3 billion cubic meters via the route annually, which is equivalent to about two-thirds of its demand.

Austrian energy regulator E-Control said it was prepared to change supply and should not face outages.

Slovak Prime Minister Robert Fico said on Wednesday that halting supplies would cost the eastern European country hundreds of millions of dollars in transit revenues and higher duties on importing other gas.

Fico stressed that this would lead to higher gas prices across Europe. The Slovak Economy Ministry said the country would bear a cost of 177 million euros ($184 million) to receive the gas via alternative routes.

Moldova is perhaps the most vulnerable. Russia sent about two billion cubic meters of gas through Ukraine to the pro-Russian breakaway region of Moldova Transnistria Annually since 2022. Transnistria, which borders Ukraine, then sells electricity generated using Russian gas to government-controlled parts of Moldova.

Moldova has already declared a state of emergency due to the impending gas shortage. President of Moldova Maya Sandhu She blamed Gazprom for not examining an alternative route, and said that the winter in Moldova would be “harsh” without Russian gas.

However, Moldova’s Prime Minister, Dorin Resian, said that Moldova has diversified its sources of gas supply.

On Wednesday, Transnistria, which has a population of 450,000 people, cut off heating and hot water supplies to homes.

Ukraine itself does not use Russian gas in transit, according to the European Commission, which added that the bloc was preparing to cut production.

Has the flow of Russian gas to Europe stopped completely?

The pipeline through Ukraine was one of the last functional routes used to export Russian gas. Other pipelines were closed in the wake of the 2022 Ukraine war, including the Yamal-Europe pipeline through Belarus and the Nord Stream pipeline under the Baltic Sea that sends gas to Germany.

Russia still uses the TurkStream pipeline, located on the bottom of the Black Sea, to export gas. The pipeline consists of two lines, one feeding the domestic market in Türkiye, while the other supplies Central European customers including Hungary and Serbia.

However, TurkStream’s capacity is limited, at 31.5 billion cubic meters for both lines combined.

What are the alternative options for Europe?

Europe is trying to reduce its dependence on Russian gas, as it has purchased liquefied natural gas from Qatar and the United States, in addition to pipeline gas supplies from Norway.

“European gas infrastructure is flexible enough to supply gas of non-Russian origin to Central and Eastern Europe via alternative routes. It has been reinforced with significant new LNG import capacities since 2022,” said Anna Kaisa Itkonen, European Commission spokeswoman.

SPP, a large energy supplier in Slovakia, said in a statement on Wednesday that it was ready to move and would supply its customers via alternative routes, mainly from Germany and also from Hungary. But she added that she would face additional costs in tolls.

According to Austrian energy regulator E-Control, Slovakia can receive gas from Hungary, about a third from Austria and the remaining supplies from the Czech Republic and Poland. The Czech Republic also said it could provide Slovakia with gas transportation and storage capabilities.

Transnistrian energy company Energocom issued a statement on Tuesday saying Moldova can meet 38 percent of its energy needs through domestic production, including 10 percent from renewable energy. Transnistria will import the remaining 62% from neighboring Romania, Energocom added.