Fico: Cutting off gas supplies through Ukraine will harm the EU more than Moscow

The suspension of Russian gas transit through Ukraine will affect the EU as a whole, but not Russia

Slovak Prime Minister Robert Fico has warned that Ukraine's decision to suspend Russian gas supplies to EU countries through its pipelines will have a "drastic impact" on the European Union.

Fico's comments come after Ukraine decided not to renew its long-term gas transit agreement with Russia's state energy company, Gazprom. As a result, the flow of Russian gas through the Soviet-era pipelines that run through Ukraine was interrupted on 1 January. This agreement had been in place for decades^[1].

Slovakia tried for months to persuade Ukraine to extend the agreement, arguing that non-renewal would lead to higher domestic and EU energy prices. Tensions between Mr Fico and Ukrainian President Volodymyr Zelensky have been rising as the deadline for the agreement approaches.

In a New Year's address posted on social media, Fico said that the suspension of gas transit through Ukraine would have a drastic impact on all EU Member States, "but not on the Russian Federation".

He also warned that terminating the gas agreement could cost the EU up to €120 billion over the next two years. Slovakia, which relies heavily on Russian gas, would lose up to €500 million annually in transit fees. Mr Fico, who met Russian President Vladimir Putin in Moscow last month, is one of the few EU leaders to have visited Mr Putin since the Russian invasion of Ukraine.

After this meeting, Fico suggested that Slovakia consider taking "retaliatory measures" against Ukraine, such as cutting off electricity supplies to its eastern neighbor. However, Ukraine quickly rejected this warning, and Poland suggested increasing energy exports to Ukraine in such a case.

For its part, Slovakia, which relies on Russia for two-thirds of its gas needs, reassured its citizens that despite losing Russian supplies, it could obtain gas under short-term agreements with Azerbaijan, the US, and other European countries.

Will EU countries be backed into a corner by such a Ukrainian decision?

After Russia cut off gas supplies to Ukraine via the EU, Ukrainian Energy Minister German Galushchenko called the move "historic" and noted that Russia will suffer financial losses as Gazprom will lose almost USD 5 billion on gas sales.

While Russia still exports gas through the TurkStream pipeline to Turkey and some Central European countries, the EU is switching to alternative sources to reduce its dependence on Russian energy. Slovakia and Austria have prepared for the change, but Slovak Prime Minister Fico has warned that it is far too early to rejoice^[2].

Moldova, badly affected by the loss of Russian gas, plans to cut its consumption by a third, while pro-Russian Transnistria has already cut its heating and hot water supplies.

According to estimates by the Russian news agency TASS, Russia has increased its pipeline gas exports to Europe by 14% to 32.1 billion cubic meters by 2024.

This is up from 28.15 billion cubic meters exported in 2023. In the same year, gas supplies to Western and Central Europe via Ukraine increased by 6% to 15.4 billion cubic meters, while gas supplies to Southern and South-Eastern Europe via TurkStream increased by 23% to 16.7 billion cubic meters.

For 2024, Russian gas exports to Turkey were expected to reach 20 billion cubic meters, bringing total gas supplies to Europe and Turkey to around 52 billion cubic meters, compared to 49 billion cubic meters in 2023.

Slovakia threatens retaliatory measures if Ukraine cuts off transit of Russian gas

At the beginning of the week, Fico warned of possible retaliatory measures against Ukraine if the country cuts off the transit of Russian gas to Slovakia after 1 January, when the current agreement expires. Ukrainian President V. Zelensky accused Fico of supporting Russia's war by continuing to buy Russian gas, and Mr Fico, in turn, warned that in such a case, Slovakia would cut off electricity supplies to Ukraine.

The Slovak Prime Minister said that the interruption of gas transit would increase energy prices in the EU, especially in Slovakia, and reduce European competitiveness^[3].

Despite efforts by Slovakia and Hungary to extend the contract, the European Commission refused to mediate. This position of Fico was strongly criticized by Zelensky, who stressed that such actions were detrimental to Slovak interests and European unity. Meanwhile, Poland has offered to increase the electricity supply to Ukraine if Slovakia complies with its warnings to stop aid.