 "Putin, Zelenskyy rule out renewal of key gas transit deal for Europe")
The leaders of Russia and Ukraine both ruled out the renewal of a key gas transit deal for Europe, sending futures surging.
Kyiv has refused to extend the five-year deal to ship Russian gas across Ukraine beyond its expiry at the end of this month, President Vladimir Putin said in Moscow. Comments from President Volodymyr Zelenskiy in Brussels also indicated that his nation will not transit Russian gas.
“There will be no such contract, it’s clear now,” Putin said during his annual press conference. “There is a question of what to do with it now — but that’s not our problem” and Russia’s gas giant Gazprom PJSC “will survive,” Putin said.
The comments came as European Union leaders met Zelenskiy, with the gas transit topic on the agenda. Nations led by key gas buyer Slovakia have in recent days stepped up efforts to find a solution to ensure that flows from the east continue next year, even if it’s becoming apparent the contract in its current form won’t be renewed.
With less than two weeks left until the new year, challenges arise for consumers such as Slovakia to put together a deal that would work for Ukraine, which has repeatedly refused to continue moving Russian gas and boost Kremlin’s revenues.
Energy firms from the region this week pushed for a deal that would allow the continued transit of gas through Ukraine next year, as alternative sources of supply would be costly for nations in central Europe. The result will be either a last-minute alternative arrangement, or a halt in supplies, closing a decades-long route for Russian gas to Europe.
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European gas prices jumped as much as 5.6%, the biggest daily gain in over a month, after falling 3% earlier, highlighting how jittery the market is.
Various alternatives have been floated, from European energy consumers buying gas at the Russia-Ukraine border to a swap in supplies involving a third party, such as Azerbaijan.
But, Zelenskiy said Thursday that alternative solutions where the Russian gas would be bought by another country before crossing Ukraine would still amount to financing Moscow.
“If that’s a different country but it gets gas from Russia and then transit its own gas — it’s the same as getting money from this war and transferring money to Russia,” the Ukrainian leader said.
Ukraine still ships about 15 billion cubic meters a year of Russian gas to a number of European nations even amid the war with Russia that has been going on for nearly three years. The remaining clients of Gazprom in the region are seeking to find a solution that would enable them to avoid interruption of supplies this winter.
If there is a country “ready to give us the gas but not pay the money back to Russia until the end of the war, then it’s a possible potentiality, we can think about it,” Zelenskiy said.
Some nations in central Europe are ready to replace the Russian gas they get via Ukraine. Austria is not part of efforts to continue those flows and is ready to meet all demand via deliveries through Italy and Germany, a senior government official told reporters Thursday.
Large customers in Austria would value the additional liquidity from further supply routes, but none of them have asked the government to push for a deal with Ukraine, Juergen Schneider, the head of the energy department at Austria’s Energy Ministry, said.