Gazprom Makes Ukraine Deal as U.S. Sanctions Russia Pipeline
U.S. Sanctions May Push Russia to Sign a Gas Deal With Ukraine
Gazprom PJSC reached an agreement to continue onshore gas supplies to Europe via Ukraine as the U.S. administration imposed sanctions on Russia’s future subsea gas-export pipeline Nord Stream 2.
AllSeas Group SA, a contractor laying pipes to connect Russian gas producers with consumers in Europe via the Baltic Sea, said it will halt work on Nord Stream 2 in the face of U.S. sanctions. The company said it took the step “in anticipation of the enactment of the National Defense Authorization Act,” which includes sanctions against companies building the project. Hours later, President Donald Trump signed the law.
The $11 billion pipeline is just weeks away from completion, but it has faced criticism from the U.S., where President Trump called Germany “a captive to Russia.” He has criticized the European Union for not pivoting away from the supplier’s energy at a faster pace -- the EU relies on Russia for more than a third of its gas.
It’s still unclear how much disruption there will be to the Nord Stream 2 project, yet Russian gas flows to Europe are set to remain steady as Gazprom settled its transit and legal issues with Ukraine, its main export route. The gas giant on Saturday said it agreed with Ukraine to continue transit until the end of 2024, with potential further extensions through 2034. Russia and Ukraine also agreed to resolved mutual lawsuits, with Gazprom paying $2.9 billion to Ukraine’s Naftogaz under the Stockholm ruling.
On Thursday night, Russia, Ukraine and the European Commission reached “an agreement in principle” on key elements of the deal to ship Russian gas to Europe, removing the biggest supply threat to the region’s market. Only three days ago, Ukraine said there was little chance of a deal.
For gas markets, a deal keeps supplies flowing, adding to a glut that emerged after last year’s warmer than usual weather. Almost half way through the heating season, inventories remain higher than usual and cargoes of liquefied natural gas are arriving at near record rates.
To contact the reporters on this story: Mathew Carr in London at m.carr@bloomberg.net;Olga Tanas in Moscow at otanas@bloomberg.net;Dina Khrennikova in Moscow at dkhrennikova@bloomberg.net;Daniel Flatley in Washington at dflatley1@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, James Amott, Guy Collins
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