Putin, Zelenskiy Rule Out Renewal of Key Gas Deal for Europe

(Bloomberg) -- 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. European 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.

European gas prices jumped as much as 4.4%, with the lack of a new deal essentially choking off gas supplies to some central European customers.

Zelenskiy said 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.

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