Ukraine Market Report — Q4 2024
The gas transit agreement expired at the end of December and was not renewed, ending a transit relationship that had operated since Soviet times and closing a chapter this archive opened in 2005.
Overview
The five-year gas transit agreement concluded at the end of 2019 expired on 31 December 2024 and was not renewed. Transit of russian gas through Ukraine to Europe ceased.
The end of a relationship this archive has tracked since 2005
The transit relationship shaped Ukrainian foreign and energy policy for the entire period covered by these reports.
The 2005 report recorded the pricing dispute that opened it. The 2006 and 2009 reports recorded the interruptions and their consequences for European supply confidence. The 2010 report recorded the arrangement that traded a lower import price for a base lease. The 2012 report recorded the first reverse-flow delivery that proved an alternative existed. The 2014 report recorded the end of direct imports. The 2015 report recorded the last purchase from the eastern direction. The 2019 report recorded the transit agreement that has now expired.
Its ending was long anticipated and its commercial effect was correspondingly limited: transit revenue had already declined substantially, European buyers had built alternative routes since 2009, and Ukraine had not bought gas from that direction since 2015.
The general observation is worth recording at the close of a twenty-year sequence. A dependency that looks structural is dismantled not by a decision but by a series of ordinary commercial and engineering steps taken over fifteen years, most of them under pressure and none of them planned as part of a programme.
Macro position
Growth for the year, below 2023. Inflation higher than the previous year on energy and labour costs. Managed exchange rate flexibility. External financing on the EU facility and IMF programme.
Sectors
Energy — a winter with reduced generating capacity, managed through imports and distributed supply.
Agriculture — a normal export year.
IT services — continued growth.
Construction — constrained by labour rather than by funding.
What the quarter settled
That the energy relationship which defined Ukraine's external position for two decades ended without an event, because everything that made it consequential had already been unwound.
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