In a move that has sparked controversy and raised concerns among European countries, Ukrainian President Volodymyr Zelensky announced that Ukraine will not renew its gas transit contract with Russia, effectively putting an end to the Russian gas transit through Ukrainian territory to Europe.

The decision comes amid an ongoing conflict between Russia and Ukraine, with Russia's invasion in 2022 and the subsequent conflict with Moscow-backed separatists since 2014. Despite the tense relations, Ukraine had allowed Russian gas to transit its territory to Europe until now.

The transit deal has been financially beneficial for both Ukraine and Russia. However, with Ukraine actively targeting Russian energy infrastructure and criticizing countries that purchase Russian energy as funding the invasion, the continuation of the transit agreement appeared increasingly incongruous.

The 2019 agreement, set to last until the end of 2024, outlined a minimum transit volume of 65 billion cubic meters (bcm) of gas for 2020 and 40 bcm for 2021-2024. The agreement was welcomed by Zelensky at the time, as he expected it to generate at least $7 billion for Ukraine.

However, following the invasion and the EU's reduced purchases of Russian gas, transit volumes plummeted. In 2023, only 14.6 bcm of gas was shipped across Ukraine, a significant decline from the 41.6 bcm transited in 2021.

The decision to end the transit agreement raises questions about the future energy supply for European countries that rely on Russian gas. Although Europe's gas imports from Russia have already fallen more than 90 percent since the 2022 invasion, some countries still heavily rely on Russian gas due to their geographical positioning. For instance, 69 percent of Slovakia's gas imports and 60 percent of Austria's came from Russia in 2023.

To mitigate the impact of the end of transit via Ukraine, the European Union states that countries will have other supply solutions. Italy, for example, has reduced its dependence on Russian gas and could increase imports from Algeria. However, land-locked Slovakia faces limited alternative options.

The decision also poses financial challenges for Russia's Gazprom, which has already faced difficulties due to reduced European gas purchases. Experts estimate that the loss of Ukrainian transit routes could cost the company an additional $5.5 billion annually, accounting for six percent of its revenue.

Amid limited options for increasing gas supplies to Europe after the explosions on the Nord Stream pipelines in 2022, the major alternative route is the TurkStream pipeline. This pipeline transports Russian gas under the Black Sea to Turkey and then onward to Bulgaria, Serbia, and Hungary through the Balkan Stream network. Additionally, Europe purchases Russian liquefied natural gas (LNG), although capacity is constrained by port facilities and onwards transmission.

Ukraine is exploring alternatives for the transit route, including shipping gas from Azerbaijan to Europe through the same pipeline network. However, the most viable options currently involve utilizing Russian infrastructure in some capacity.

The decision to end Ukrainian transit for Russian gas raises uncertainties for Europe, as countries navigate alternative supply solutions amidst shifting energy dynamics and geopolitical tensions.