Why the Russia-Ukraine Gas Dispute Worries Europe

Europe was shaken in 2009 when vital midwinter supplies of Russian natural gas, piped through Ukraine, cut out because of a price dispute between the two former Soviet countries. Although Europe has since diversified supplies and increased stockpiles, it’s still heavily dependent on Russian gas. A feared repeat of 2009 was averted when Russia and Ukraine reached a new accord with just one day to spare -- a relief all around, especially since Russia’s key alternative pipeline is hindered by U.S. sanctions.

Russia supplies almost 37% of the gas market in Europe. Ukraine earns $3 billion a year from carrying Russian gas to Europe. And Russian gas giant Gazprom PJSC sends more than 40% of its exports to Western Europe and Turkey via the pipeline network run by Ukraine’s Naftogaz JSC. The new deal will allow Russian gas to flow to Europe through the end of 2024. It also ends a plethora of related legal battles and signals a potential resumption of Ukraine purchases of Russian gas that ended in 2015. European officials mediated discussions, which were entangled in the broader conflict between Russia and Ukraine.