What Ukraine's Russia incursion means for EU gas supply

Ukraine's incursion into Russia's Kursk region has brought the gas transit hub in Sudzha into sharp focus.

A few kilometers inside Russia from the Ukrainian border, Sudzha is an important processing point for Russian gas being exported to Europe. Gas from Siberia arrives there before it is piped via Ukraine toward EU countries such as Hungary, Austria and Slovakia.

Last week, a Ukrainian military brigade published a video of its soldiers at the offices of Russian gas giant Gazprom's offices at the Sudzha station and claimed it was under their full control. Russia claims Ukraine does not have full control of the facility.

Earlier this week, satellite images published by Radio Free Europe/Radio Liberty appeared to show significant damage to some of the facilities following fighting in the area.

However, Gazprom said last week it was still pumping gas via Ukraine from Sudzha while network operators in Austria and Hungary said supply had not been disrupted.

What could happen to the Sudzha gas station amid the fighting?

Neither Ukraine nor Russia appear to want to end the transport of gas at present via Sudzha — assuming the relevant infrastructure is not damaged.

Benjamin Hilgenstock from the Kyiv School of Economics says if Ukraine wanted to end the flow of Russian gas, it could do so from within its own territory at any time, so there is no reason for them to seize the station at Sudzha for this particular purpose.

"I'm not entirely sure if this is relevant," he told DW. "If Ukraine wanted to stop the transit of Russian gas, it could."

Sudzha is the only transit hub in Russia that still processes gas en route to Ukraine. In May 2022, a few months after Russia's full-scale invasion of Ukraine, Kyiv stopped receiving gas through the hub at Sokhranovka, located east of Ukraine's Luhansk region.

How much longer is Russian gas likely to flow to Europe via Ukraine?

In December 2019, Moscow and Kyiv struck a five-year gas transit deal involving state companies Gazprom and Naftogaz for the transit of Russian gas via Ukraine.

The deal expires in December 2024 and Kyiv has long signaled that it does not want to extend it. Russia says it will continue to supply gas until the deal expires.

If it is not renewed, Russian gas will stop flowing through Ukraine. However, Hilgenstock noted that it appears not to be in either Ukraine's or Russia's interests to stop supply before then.

"The European countries that are still receiving Russian gas through the Ukrainian pipeline system know that there's an expiration date on this at the end of the year," he said. "I don't think they would be very happy if anything happened with the gas flow in the remaining four and a half months."

Being seen as legally compliant and a reliable partner for EU countries appears to be the most important consideration for Kyiv in maintaining gas flow. 

According to data published by Ukraine's central bank, Kyiv received $1.54 billion (€1.4 billion) from Russian gas transit fees in 2023 and $392 million in the first three months of 2024  "In the bigger scheme of things, this is negligible from the Ukrainian side," said Hilgenstock, adding that Ukraine will not renew the gas deal at the end of 2024. "It is just ending. And in a normal situation, it would have been extended in some way. But in this case, it just won't be."

Why is Russian gas still coming into Europe anyway?

When the war in Ukraine began, European leaders were forced to deal with a long-established dependence on Russian gas and oil. Gas was a particular problem, as in 2021, more than a third of the EU's gas came from Russia.

The EU was reluctant to sanction gas and openly fretted about not having enough supply. But individual countries dramatically cut their imports of Russian gas and according to EU data, the share of Russian pipeline gas member states imported fell from 40% of the total in 2021 to about 8% in 2023.

However, when liquefied natural gas (LNG) is included — natural gas cooled down to liquid form so it can be transported by ship —  the total share of Russian gas in the EU total last year was 15%.

According to the nonprofit Center for Research on Energy and Clean Air (CREA) in Helsinki, Finland, the EU imported €3.6 billion ($3.9 billion) of Russian LNG and €4.8 billion of Russian pipeline gas in the first half of 2024, accounting for more than three-quarters of all its spending on Russian hydrocarbons, including oil.

Austria, Hungary and Slovakia are still importing gas from Russia via pipeline. Almost all of Austria's gas comes from Russia, but Vienna says it is actively working to find alternatives.

Hungary and Slovakia both have pro-Moscow ties but are also preparing for the possible end of supply via Ukraine at the end of 2024. Hungary recently struck a gas deal with Turkey, but this gas, via the Turkstream pipeline, is also from Russia.

Slovakia remains especially dependent, but Slovak gas company SPP says it has been preparing for the risk of a halt in Russian gas supply for several years and has contracts in place with non-Russian suppliers.

Does Russian gas have a long-term future in Europe?

With the Ukrainian route expected to close off soon, Turkstream is likely to become the only viable pipeline route for Russian gas into Europe.

That leaves LNG as the other main way Russian gas will still get to Europe. Russian LNG is coming into the EU in ever larger quantities. France, the Netherlands and Spain are among the biggest buyers.

According to trade-data provider Kpler, Russia is now the EU's second-biggest LNG supplier. LNG imports from Russia accounted for 16% of the EU's total LNG supply in 2023, a 40% increase compared with 2021.

Another issue has been trans-shipping. This is when gas is processed at European ports before being re-exported to third countries worldwide. A recent report by CREA found that just under a quarter of Europe's LNG imports from Russia (22%) were trans-shipped to global markets in 2023.

Meanwhile, the United States-based Institute for Energy Economics and Financial Analysis (IEEFA) reports that EU trans-shipments of Russian LNG were up 12% in the first half of 2024 compared to the same period last year.

The EU finally decided to take action on trans-shipping earlier this year. From March 2025, there will be a ban on the trans-shipping of Russian LNG at EU ports.

Benjamin Hilgenstock thinks the EU's decision not to sanction Russian gas is the main reason it still comes into the bloc but at the same time, he said it is important to acknowledge how much has been done.

"One has to be honest and come to the conclusion that what is left of EU hydrocarbon imports from Russia is a very small share of what was originally there. So a lot has been accomplished."

Edited by: Uwe Hessler