Reuters: Moscow and Washington discuss the return of Russian gas to Europe through a peace deal

Sources told Reuters that Washington and Moscow are holding unannounced talks to restore Russian gas flows to Europe as part of a potential settlement to end the war in Ukraine, amid economic pressure on Russia and sharp European disagreement over resuming trade with Moscow.

In a remarkable development reflecting potential shifts in the global energy balance, informed sources revealed to Reuters that officials from the United States and Russia held unannounced talks on the possibility of Washington supporting the resumption of Russian gas exports to Europe, within a broader context that includes efforts to conclude a peace agreement in Ukraine.

According to eight sources familiar with the negotiations, the discussions addressed ways to reintegrate Russian gas into the European market, a move that could facilitate an agreement with Russian President Vladimir Putin amid mounting economic pressure on Moscow due to the loss of its largest market following the Russian invasion of Ukraine in 2022.

Western sanctions and the widespread European abandonment of Russian gas have caused massive losses for the state-owned gas company Gazprom, which recorded a massive loss of approximately $7 billion in 2023.

Its share of the European market declined from 40% to just 19%, primarily for liquefied natural gas (LNG) and some supplies via the TürkStream pipeline through Türkiye.

According to sources, the administration of US President Donald Trump, which is seeking to advance the peace process in Ukraine, is considering entering into arrangements that could enable US companies to act as intermediaries in purchasing Russian gas and re-exporting it to Europe, or even own stakes in vital infrastructure such as the Nord Stream pipeline or gas networks across Ukraine.

The Kremlin, through its spokesman, Dmitry Peskov, confirmed that Russia is open to resuming gas exports to Europe, provided there is political will.

He noted that there are potential sellers and buyers, and that Moscow is ready to return to the market.

European countries that continue to purchase Russian gas include Hungary and Slovakia via TürkStream, as well as France, Belgium, Spain, and the Netherlands, which import LNG from the Russian company Novatek under long-term contracts.

In contrast, the European Commission continues to categorically reject any return of Russian gas.

The EU Commission President Ursula von der Leyen stated during a European Parliament session on May 7 that “reopening the tap of Russian gas and oil would be a historic mistake, and we won’t allow it to happen”.

Brussels is seeking to impose a ban on any new gas contracts with Russia by the end of 2025 and the termination of existing contracts by 2027, a plan that will be presented to the European Parliament for discussion next month and faces opposition from countries such as Hungary and Slovakia.

Despite Moscow’s openness, significant technical and legal hurdles remain, as these include the damage to the Nord Stream pipelines following the September 2022 sabotage attack, which disabled three of the four pipelines, as well as pending legal disputes over breached contracts.

Nord Stream 2 also didn’t receive German government approval prior to commissioning, further complicating the legal situation.

Among the scenarios being considered, according to the same sources, is a proposal for major American companies such as BlackRock, Vanguard, and Capital Group to invest in Russian gas infrastructure or in Gazprom itself.

Although these companies already own small stakes in Gazprom, any expansion of their ownership could allow Washington to have a supervisory role over the amount of gas flowing back to Europe, mitigating European political objections.

According to diplomatic sources, US envoy Steve Witkoff has already held talks with Kirill Dmitriev, the Kremlin’s investment envoy, on this issue as part of broader discussions related to peace in Ukraine.

However, a spokesperson for Witkoff declined to comment, while Dmitriev’s Russian Direct Investment Fund denied that such discussions were currently taking place.