Valletta [Malta], January 11: Since the halt of Russian gas transit through Ukraine on Jan. 1, Europe has been grappling with tight gas supplies and soaring prices.
This situation threatens the energy security of several European countries, and significantly undermines the competitiveness of the European Union (EU) due to rising energy costs. Meanwhile, the United States stands to benefit from the increased export of liquefied natural gas (LNG) to Europe.
"SIGNIFICANT HARM"
Slovak Prime Minister Robert Fico said in a social media post on Wednesday that Ukraine's unilateral decision to stop transit of any Russian gas is causing "significant harm" to Slovakia and the EU. The stoppage could result in losses of nearly 1.5 billion euros (1.55 billion U.S. dollars) for Slovakia and approximately 70 billion euros for the EU, he said.
Speaking to reporters in Brussels on Thursday after meeting with EU Energy Commissioner Dan Jorgensen, Fico said that his government may consider halting humanitarian aid to Ukraine in response to the ongoing Russian gas transit dispute.
In 2023, roughly 15 billion cubic meters of Russian gas were transported via Ukraine to Europe, accounting for around 5 percent of European needs. Slovakia, which is heavily dependent on Russian gas, imports approximately 3 billion cubic meters of natural gas from Russia through Ukraine annually, accounting for two-thirds of its demand.
For now, the Turkish Stream pipeline under the Black Sea has become the sole remaining route for transporting Russian gas to Europe. Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto sai
on Tuesday that without the Turkish Stream pipeline, Hungary will now "be in an extremely difficult position as a landlocked country."
Amid tight supply and increased demand driven by freezing temperatures, Europe is consuming its gas reserves at the fastest rate since 2018. Current gas storage levels stand at 70 percent capacity, compared to 86 percent at the same time last year.
Among EU countries, the Netherlands has the lowest storage, at just 58 percent, down from 82 percent a year ago. Refilling the reserves after the winter is expected to be challenging, potentially leading to further increases in short-term gas prices.
In the Transnistria region, 72,000 households have been left without gas, while 1,500 apartment buildings have no heating or hot water, Moldova's local media has reported. End-user prices for households in the country have risen by 65-75 percent as of January 2025 compared to the end of last year.
SOARING PRICES
Natural gas prices in Europe have surged by 20 percent after Ukraine ceased the transit of Russian natural gas through its territory, Szijjarto said Tuesday. He attributed the price increase to "artificially imposed reductions in supply," originating from political decisions and sanctions.
Slovak Deputy Prime Minister and Minister of the Environment Tomas Tarab said on Thursday that it is not only "indefensible" for gas prices on the European continent to be nearly five times higher than in the United States following Ukraine's decision, but it is also "economically impossible" for Europe to compete with anyone with such differences.
The Dutch TTF, Europe's natural gas benchmark, saw February delivery prices briefly reach nearly 51 euros per megawatt-hour on Jan. 2, the highest level since October 2023. In comparison, March 2024 contracts were around 30 euros.
Spurred by the gas transit cessation and colder weather, European gas prices have hit their highest levels in over a year, Hungary's leading business portal Portfolio has reported. This surge presents significant challenges for Hungary, where the government's energy price cap system is already under strain, and places a heavy financial burden on the state, the report noted.
Ronald de Zoete, a Dutch oil and gas expert, attributed the price spike primarily to the EU's ban on Russian gas. Speaking to Dutch media, he emphasized that Europe risks rising energy costs over boycott of Russian gas, and European households and businesses will bear the brunt.
In addition, demand for gas in Europe will increase significantly between March and September, which will lead to higher prices, Joze P. Damijan, a Slovenian economist and politician, wrote in his blog recently. EU countries will have to fill about half of their storage capacity over the summer at prices that are about twice as high (or more) than last year and the year before, he said.
U.S. REAPING BENEFITS
Since the outbreak of the Russia-Ukraine conflict, the United States has emerged as the largest supplier of LNG to Europe. According to the European Commission, in 2023, the EU's imports of LNG from the U.S. accounted for 46 percent of its total LNG imports, nearly double the amount in 2021. Europe accounted for 55 percent of total U.S. LNG exports in 2024, according to preliminary data from financial firm LSEG.
The U.S. president-elect, Donald Trump, has warned the EU that it will face trade tariffs on its exports to the U.S. unless its member states buy more American oil and gas.
Fico said on Wednesday that the transit stoppage "significantly helps" the United States, which could increase its gas supplies to Europe.
According to a recent report from Bruegel, a Brussels-based economic think tank, EU gas wholesale prices averaged nearly five times higher than those in the United States in 2024.
The United States has benefited the most from the boycotting of Russian oil and gas, since it sells its gas at significantly higher prices than Russian gas, Croatian economic analyst Milivoj Pasicek has said. "This is happening now, so in the future prices will rise even more, and the United States will benefit more," he added.
With Russian gas no longer an option, Europe has had to source its energy from elsewhere, primarily the United States, de Zoete said. However, importing LNG from the United States comes with significant logistical costs, which are ultimately passed on to consumers and businesses, he added.
Source: Xinhua News Agency
