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By Maya Mehrara
News Reporter
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Russian President Vladimir Putin has blamed Ukraine for a lack of time to sign a new Ukrainian gas transit deal this year, dashing the hopes of EU countries friendly to him for further supplies, according to Reuters.
The current five-year agreement allowing Russian gas to Slovakia, the Czech Republic, Hungary, and Austria will expire by the end of the year. Putin "allies" Robert Fico, prime minister of Slovakia, and Viktor Orbán, prime minister of Hungary, were both in favor of continuing the deal.
Newsweek reached out to the foreign affairs departments of Russia, Ukraine, Slovakia, and Hungary for comment via email.
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Why It Matters
Putin's failure to sign a new gas deal with Ukraine will shift the natural gas sources of some European countries and cause monetary losses as they look to other countries to fill the import void and find new methods of transit. Gas prices have already risen 5 percent as a result of the impasse, said Bloomberg Friday. Any loss of revenue for Russia could affect its ability to wage war on Ukraine.
What To Know
Russian gas supplies to Europe have decreased since the war began in February 2022, due to sanctions. Moscow shipped approximately 15 billion cubic meters (bcm) of gas via Ukraine in 2023, just 8 percent of its peak flows to Europe from 2018 to 2019. Ukraine has previously said it would not renew the deal which expires on December 31 because it helps fund Russia's war effort.
In addition to the time factor for signing a new deal, Putin also cited a lawsuit that was hampering supply. The Russian president also noted that Russia would be happy to supply gas to Europe via Poland.
Fico recently visited Moscow to push for peace negotiations between Russia and Ukraine, in an effort to keep the gas flowing. Ukrainian President Volodymyr Zelensky has since criticized Fico for not accepting a $229 million compensation deal for the losses caused by nonrenewal of the agreement.
Like Fico, Putin ally Orbán has also been engaging in talks to keep Russian gas flowing to Budapest through Ukraine. The country imported approximately 7.5 bcm of Russian gas via the Turkstream pipeline and additional amounts via Romania this year.
Discussions of a new gas deal were reportedly underway in November, which would keep Ukraine as part of the transport route but exclude Russia as the gas provider. The new contract would be 12 to 14 bcm of gas per year from Azerbaijan via the same routes that currently transport Russian gas to Slovakia, Austria, and Hungary.
According to Bloomberg, the gas lost through the expired contract would account for about 5 percent of demand in Europe, and countries would have to rely more heavily on piped gas from Norway or liquefied supplies from the U.S.
What People Are Saying
In a briefing on TV, Putin said: "They announced that they would not renew the contract. There is no contract and it is impossible to conclude it in 3-4 days."
Zelensky wrote on X, formerly Twitter: "We are fighting for our lives, Fico is fighting for money, and it's unlikely that money is for Slovakia. Shadow agreements with Putin are either a trade of state interests or working for personal gain."
In a statement to Newsweek, Máté Paczolay, a spokesperson for Hungary's Ministry of Foreign Affairs and Trade, said: "Hungary has been calling for real and substantive peace talks from the very beginning, because the sooner the warring parties come to the negotiating table, the more lives can be saved. Therefore we support all efforts for peace."
Tracy Shuchart, the host of the podcast MicDropMarkets, about global markets, wrote: "European Gas Jumps as Putin Doubts New Transit Deal Can Be Made. 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. Benchmark futures jumped as much as 5 percent Friday, the most in a week. Putin said Thursday it would be impossible to arrange a new transit contract before year's end, when the current agreement expires (Source: Bloomberg)."
Bloomberg said: "Talks continue in the remaining days of the year and a last-minute deal cannot be completely ruled out, especially given the history of such arrangements at the last moment during previous gas disputes."
What Happens Next
It remains to be seen whether the new gas deal with Azerbaijan pans out and whether or not Russia will continue supplying gas to European buyers via another route.
UPDATE, 12/31/24, 10:12 a.m.: This article has been updated with comment from Máté Paczolay.
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