US, Russia explore ways to restore Russian gas flows to Europe, sources say
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LONDON/MOSCOW: With a frost covering Europe 's energy relations with Russia , officials from Washington and Moscow have held discussions about the U.S. helping to revive Russian gas sales to the continent, eight sources familiar with the talks have told Reuters.Europe slashed its imports of Russian gas following Moscow's invasion of Ukraine in 2022, a move that saw Russian exporter Gazprom post a $7 billion loss the following year.U.S. President Donald Trump is pushing for peace in Ukraine, raising the prospects of a thaw in gas ties.Sources close to the bilateral discussions said carving out a renewed role for Moscow in the European Union's gas market could help cement a peace deal with Russian President Vladimir Putin.Though much of Europe has sought alternative supply, some buyers have remained, and industry officials say more could return once a peace deal is agreed.As for Russia, nothing has hit its economy harder than the loss of most of Europe's gas market three years ago.It now supplies 19% of Europe's demand, down from 40%, mainly consisting of liquefied natural gas (LNG) and some piped via Turkey along the TurkStream pipeline.Washington's involvement in restoring the gas sales could help Moscow navigate political opposition in much of Europe.U.S. involvement would also benefit Washington, giving it visibility, and possibly some control, over how much Russian gas returns to Europe, two diplomatic sources and a White House source said.Since 2022, Europe has turned to other gas providers, including U.S. exports of liquefied natural gas (LNG).U.S. envoy Steve Witkoff and Putin's investment envoy, Kirill Dmitriev, have held conversations about gas as part of Ukraine peace talks, two of the eight sources said.Witkoff's spokesperson declined to comment when asked if he discussed the issue of Russian gas exports to Europe."Currently, there are no such discussions," Russia's Direct Investment Fund, headed by Dmitriev, said in a statement to Reuters.Gazprom would consider selling gas to Europe if a new owner took control of the gas network between Russia and Europe, Kremlin spokesperson Dmitry Peskov told French magazine Le Point in April.On the route crossing the Baltic Sea Gazprom controls the two twin pipelines of Nord Stream 1 and 2 backed by European firms which hold stakes.Moscow is ready to trade its gas and knows that some European countries still want to buy it, Peskov said in the Le Point interview. "There is a gas seller, there are potential buyers," Peskov told reporters in April.Countries still buying include Hungary and Slovakia which receive gas through the TurkStream pipeline. Belgium, France, the Netherlands, and Spain get LNG from Russia's Novatek under long-term contracts.Regarding how the Americans might get involved, five sources said talks to date have discussed U.S. investors taking stakes in the Nord Stream pipeline connecting Russia and Germany, or in the pipeline crossing Ukraine, or in Gazprom itself.U.S. firms could also serve as the buyers, purchasing gas from Gazprom and shipping it to Europe, including to Germany, the sources said.Two of the sources said diplomatic talks involving potential U.S. investors have also looked at the idea of a U.S. buyer taking Russian gas and then exporting it on to Europe as a way of alleviating European political opposition to resuming supplies.BlackRock, Vanguard and Capital Group each hold stakes of 1-2% in Gazprom.BlackRock, Vanguard and Gazprom did not respond to requests for comment. Capital Group declined to comment.The European Commission declined to comment. Commission President Ursula von der Leyen has expressed her opposition to returning to Russian energy supplies."Some are still saying that we should re-open the tap of Russian gas and oil. This would be a mistake of historic dimensions and we would never let it happen," she told a European Parliament session on May 7."Russia has proven, time and again, that it is not a reliable supplier."Brussels wants to ban new Russian gas deals by the end of 2025 and ban imports under existing deals by the end of 2027. The plan, to be debated next month, would require approval from the European Parliament and a majority of member states. Hungary and Slovakia have expressed their opposition to the move.Trump has said he hopes for a Ukraine peace deal soon and expects this to pave the way for both Russia and Ukraine to do big business with the U.S.Russia is ready to restart gas exports to Europe immediately if there is political will to do so, Putin has said.Kyiv and Washington signed a U.S.-Ukraine minerals deal on April 30 to include all Ukrainian government-owned natural resource assets and infrastructure but did not explicitly mention the pipeline."If this level of engagement between Russia and the U.S. continues, it's very likely that there will be a resumption of Russian gas flows... involving U.S. intermediaries," said a person who is familiar with the discussions.Gazprom, keen to resurrect its European sales, is considering offering German clients short-term 24-month contracts and steep price discounts, two sources said.Traditionally it has asked buyers to sign contracts lasting decades, two sources noted.Yet the EU remains broadly opposed, and there are other hurdles to overcome. There are numerous legal cases hanging over breaches of legacy contracts.The Nord Stream pipelines were damaged in a sabotage attack in September 2022. Three of the four pipes were ruptured, leaving just one still able to pump gas.The war in Ukraine has also changed the situation, with Russian attacks damaging pipelines crossing Ukraine, though the key transit route remains in working order.A more technical matter is that Nord Stream 2 also never received German government approval to begin sending gas to Germany, a spokesperson from Germany's economy and energy ministry noted, declining to comment further.
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