Investing.com — European prices rose on Friday after Russian President Vladimir Putin downplayed the chances of securing a deal to continue gas flows to Europe through Ukraine.
Benchmark futures rose as much as 5% on the day, the strongest gain in a week, following Putin’s statement that arranging a new transit agreement before the current deal expires at year’s end would be impossible.
Central European countries still purchasing Russian gas have proposed alternatives to keep supplies moving through Ukraine, but Ukrainian President Volodymyr Zelenskiy opposes any plan that channels funds to Russia during the ongoing war.
Putin noted that proposals involving Hungary, Slovakia, Turkey, or Azerbaijan managing the transit face challenges, as Gazprom (MCX:) PJSC’s long-term contracts are difficult to alter.
The at-risk flows represent about 5% of Europe’s gas demand. While relatively small, losing those volumes would increase reliance on Norwegian pipelines or liquefied natural gas imports from the U.S.
European traders are closely tracking gas storage levels, which have now fallen below 75%.
Putin added that Ukraine’s Naftogaz lawsuit, accusing Gazprom of incomplete transit payments, is another obstacle. He insisted the claim must be withdrawn for any deal to proceed.
At 11:25 a.m. in Amsterdam, , Europe’s gas benchmark, was up 2.34% at €46.8 per megawatt-hour, with the January contract set to expire on Monday.
Gazprom’s CEO Alexei Miller said on Thursday that the company’s natural gas production is expected to grow by 61 billion cubic meters (bcm) this year, reaching around 416 bcm.
This rebound follows a difficult 2023, when production hit a record low after falling 13% due to reduced exports to Europe, previously Gazprom’s main revenue source, amid tensions over the Ukraine conflict.
Miller said that gas exports to China are projected to increase to 31 bcm this year, slightly above the planned 30 bcm. While Gazprom has been negotiating with China to expand sales, including through the Power of Siberia 2 pipeline, progress has been limited, primarily due to price disagreements.
In response, Gazprom has shifted focus to the domestic market and nearby countries like Kazakhstan, Uzbekistan, and Kyrgyzstan.
The company reported record domestic gas supplies of 390 bcm in 2024.
