Bloomberg: European gas jumps as Putin doubts new transit deal can be made

Pic.: Energyintel

European natural gas advanced after Russian President Vladimir Putin cast further doubt on the likelihood of a deal to maintain flows to Europe via Ukraine, Bloomberg reports.

Benchmark futures settled 4.4% higher after jumping as much as 5% Friday, posting a second consecutive weekly increase. Putin said Thursday it would be impossible to arrange a new transit contract before year’s end, when the current agreement expires.

Central European nations that still buy Russian gas have floated alternative solutions to keep the fuel flowing across Ukraine, but Zelenskiy has rejected any arrangement that sends money to Russian coffers while the war continues.

As things stand, there will be no transit of Russian gas from Jan. 1, Heorhii Tykhyi, spokesperson for Ukraine’s Ministry of Foreign Affairs, said on Friday.

Meanwhile, no capacity on the Slovakia-Austria border point was booked for January at auctions on Friday.

Putin on Thursday acknowledged that the various proposals on the table — allowing Hungary, Slovakia, Turkey or Azerbaijan to take control of the gas shipped via Ukraine — are difficult to realize because Gazprom PJSC has long-term contracts that are hard to change.

The flows at risk account for about 5% of European demand. While that’s a small slice of the market, the loss of those volumes would force countries to rely more heavily on piped gas from Norway or liquefied supplies from the US.

Traders in Europe are closely monitoring the region’s gas storage, with levels now around 75% full.

Putin also said a lawsuit from Ukraine’s Naftogaz that alleges Gazprom hasn’t fully paid for transit services is another barrier to a deal. That claim must be withdrawn for any transit agreement to be reached, he said.

Dutch front-month futures, Europe’s gas benchmark, settled at €47.73 a megawatt-hour. The January contract expires Monday.

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