Ukraine announces it will not extend the natural gas transit contract in 2025, impacting Europe

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2024-09-01

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On the 30th, Ukrainian officials announced that starting January 1, 2025, they will halt the transit of Russian oil and gas through Ukraine once the current agreement expires.

In an interview, Mykhailo Podolyak, an advisor to the Ukrainian president, revealed that the transit contract between Gazprom and Naftogaz is set to end in late 2024. President Volodymyr Zelenskyy has decided not to extend the agreement, meaning that the Druzhba Pipeline, which runs through Ukraine, will cease operations.

The Druzhba Pipeline, also known as the Friendship Pipeline, is the longest oil pipeline in the world and serves as a major route for transporting Russian crude oil to Central and Eastern Europe. According to the BBC, currently, a quarter of the EU's natural gas consumption comes from Russia, with approximately 80% of this gas being transported via the Druzhba Pipeline before reaching EU countries. Ukraine and Russia signed a five-year agreement at the end of 2019 to transport gas through Ukraine to Europe. Despite Russia's invasion of Ukraine in February 2022, gas and oil continued to flow through this pipeline until the agreement's expiration at the end of 2024.

Foreign media analysis suggests that Slovakia, the Czech Republic, and Hungary will be most affected by the pipeline's closure, while other EU countries will experience less impact. Hungary, in particular, heavily relies on this pipeline. Due to Hungary and Slovakia's passive stance on aiding Ukraine, the EU has faced delays in providing over a billion euros in military aid to Ukraine, largely due to Hungary's opposition. Additionally, Slovakia and Hungary have opposed Ukraine's use of Western weapons to attack Russian territory. Some media speculate that Ukraine's recent offensive in the Kursk region and its capture of the Sudzha transit point—located within Russia and the last gas relay station in the Druzhba Pipeline—along with threats to shut down the pipeline, aim to enhance Ukraine's leverage in negotiations with the EU to secure more military assistance.