US, Russia Discussing Restoring Gas Flows To Europe As Key To Grand Ukraine Deal

The Trump administration is pushing forward with seeking to forge a peace deal in Ukraine, despite recent warnings it could give up trying to mediate if progress isn’t made, as well as seeking to repair bilateral US-Russia relations.

“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,” Reuters has cited eight sources to say.

Europe, other than a couple holdout countries like Hungary and Slovakia, drastically slashed its Russian gas imports soon after February 2022 and the start of the Ukraine war. Gazprom subsequently posted a $7 billion loss in 2023.

Russian gas coming back online to the continent is being presented as a key incentive by Washington:

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 Russia’s economy was hit hard the loss of most of Europe’s gas market three years ago, it has increasingly solidified its partnership and dependence on China for energy and industrial trade.

We reported earlier Thursday that Presidents Xi and Putin discussed Russia’s Power of Siberia 2 gas pipeline project in Moscow ahead of Victory Day events. However, Russia’s Deputy Prime Minister Alexander Novak specified the two leaders avoided the somewhat contentious question of avoiding the pipeline’s transit through Mongolia. Russia plans to boost supplies of oil, gas, and LNG to China, Bloomberg has noted Thursday.

Russia currently supplies 19% of Europe’s demand, mostly LNG, down from 40% in terms of prewar levels.

As for progress on Ukraine peace, Vice President JD Vance just offered some thoughts in Munich:

Washington wants to move away from the “obsession” with a 30-day ceasefire proposed by Ukraine, US Vice President J.D. Vance has said. The US is more interested in shaping a durable peace agreement with Moscow, he told a Munich Leaders Meeting on Wednesday.

Ukraine had floated a one-month ceasefire as a counter to Russia’s 72-hour truce proposal to mark the 80th anniversary of the Soviet victory over Nazi Germany.

However, Moscow has rejected Kiev’s plan, arguing that Ukrainian troops, which have been on the backfoot for months, would use it to regroup and strengthen their military posture.

Vance stressed that the US remains interested in a “long-term settlement” of the conflict rather than a short-term one. 

“We’ve tried to move beyond the obsession with the 30-day ceasefire and more on the what would the long-term settlement look like? And we’ve tried to consistently advance the ball,” the vice president said, warning the Russians to make the necessary concessions. 

“Certainly, the first peace offer that the Russians put on the table, our reaction to it was you’re asking for too much,” he said. “But this is how negotiations unfold.”