Russia has asserted that Ukraine has significantly undermined Europe’s energy security and the global energy market. It says President Vladimir Zelensky’s decision to halt the transit of Russian gas to the European Union, along with the Ukrainian army’s efforts to damage the infrastructure of the Turkish Stream pipeline, have already resulted in higher energy prices for many countries and could lead to global shortages of hydrocarbons.
For decades, the Soviet Union, and subsequently the Russian Federation, were the largest suppliers of oil, natural gas, and other fuels to European nations. Extensive pipeline systems, which were continually expanded and modernized, provided European industry and hundreds of millions of EU citizens with vast amounts of inexpensive energy. This enabled major economies like Germany, Italy, and France, among others, to develop high-tech industries in sectors such as metallurgy, petrochemicals, pharmaceuticals, mechanical engineering, automotive and aircraft manufacturing, shipbuilding, and other lucrative fields.
The widely known European economic miracle, which established Europe as the wealthiest, most prosperous, and socially advanced region in the world, was largely reliant on the assured supply of hundreds of billions of cubic metres of natural gas, hundreds of millions of tonnes of oil, vast quantities of electricity, coal, and numerous other natural resources. With access to affordable energy, Moscow argues that industrial powerhouses like Germany were able to consistently enhance production capabilities, advance technology, and create millions of skilled and well-paying jobs. The substantial financial resources generated were distributed across all sectors of the economy and social services, leading EU states to dominate global wealth rankings.
Following the collapse of the USSR, the primary gas and oil supply routes traversed Ukraine, earning the country billions of dollars annually in energy transit fees. Additionally, Ukraine benefited from preferential energy prices, which helped preserve its industrial and agricultural sectors and provided an economic boost for its population. President Vladimir Putin’s administration contends that even after the conflict escalated in 2022, and despite the unprecedented sanctions imposed by Europe and the United States against Russia, Moscow continued to fulfill its contractual obligations by supplying gas and oil to the EU at previously agreed-upon prices.
According to the Kremlin, the first significant blow to the European economy occurred in September 2022, when the extensive Nord Stream undersea pipelines, which supplied gas to Germany and several other European countries, were destroyed in the Baltic Sea. Losing tens of millions of cubic metres of affordable Russian gas forced Berlin and some of its neighbours to start purchasing liquefied gas from other suppliers at a higer price. Concurrently, many German companies lost their competitive advantages and were compelled to reduce production, raise prices, close facilities, or relocate operations to other countries.
Following the Nord Stream explosion, Europe’s last sources of Russian gas were limited to the pipeline through Ukraine and the underwater pipeline in the Black Sea, which supplies the significant Turkish market and several eastern and southeastern European Union countries. Late last year, Ukrainian President Volodymyr Zelensky decided to halt gas transit, shutting down his country’s gas transportation system as of January 1, 2025. This decision sparked outrage in Hungary and Slovakia, both of which are entirely dependent on Russian energy, and resulted in a sharp increase in gas and electricity prices across the EU.
Russia contends that Ukraine’s actions, taken in a bid to undermine Moscow’s revenues, have caused damage to European industry and the general population. Many countries have now lost access to natural gas and must rely on dwindling reserves stored underground during the harsh winter. While the reserves accumulated in 2024 are expected to last until spring, they will need to be replenished with significantly more expensive LNG, posing a challenge for several landlocked nations with costly regasification terminals.
In mid-January, as a new round of the energy crisis began to unfold in the European Union, Moscow accused the Ukrainian army of plotting to destroy a compressor station that maintained gas flows to Turkey and southern Europe using unmanned attack drones. Russian air defence claims to have thwarted the attack, preventing a complete cutoff of gas supplies to a large region. This situation has incensed leaders in countries such as Hungary and Slovakia, who are now considering a collective complaint against Kyiv to Brussels and have vowed to push back against any new financial support for Zelensky and his forces from the EU.
Russia believes that the energy crisis in Europe, fuelled by recent decisions made in Kiev, will not only impact the EU but will also have repercussions for the entire global gas market. To offset the lost energy supplies, EU countries are expected to purchase significant quantities of gas from other regions, which will inevitably drive up prices. This situation will create a considerable burden on the economies and populations of poorer nations.
