European leaders are set to urge EU authorities and Ukraine to intensify talks over a possible resumption of Russian gas transit through Ukraine. Slovakia’s Prime Minister Robert Fico has revealed that he’s not ruling out the resumption of gas through Ukraine following the expiration of a 5-year transit deal between Moscow and Kyiv. Fico has been pushing President Volodymyr Zelenskiy to restart the transit, citing higher energy costs for Slovakia and the whole region. European Union leaders met on Thursday foran extraordinary summit to discuss Ukraine and European defence.

‘‘The pipeline that runs through Slovakia has a capacity of 100 billion cubic meters,” Fico told reporters in Brussels. “I want to do everything to ensure it is used in the future,’’ he added.

Last year, Moscow said it’s open to another gas deal with Ukraine. Back in November, Russia said it’s willing to continue supplying gas to Europe via Ukraine if Kyiv and the involved European countries can come to an agreement.

“Of course, in my opinion, the European countries that currently receive gas through this corridor are interested in continuing such cooperation,”  Russian Deputy Prime Minister Alexander Novak, who is in charge of Russia’s energy policy, told reporters “We are ready to supply (gas), but not much depends on us, so probably this should be negotiated directly between the users and the country through which the transit is provided.”

Ukraine is set to lose up to $1 billion a year in transit fees from Russia– which it hopes to offset by quadrupling its domestic gas transmission tariffs for consumers–while Gazprom will lose close to $5 billion in gas sales. Ukraine gas amounted to 5% of total EU gas imports.

European natural gas futures rebounded to €41.5/MWh on Thursday, reversing two sessions of losses, driven by forecasts for colder-than-normal weather. This increase in heating demand is likely to further reduce gas storage levels before the end of the heating season. EU gas storage is currently 37.3% full, having depleted at a faster-than-expected clip this winter due to colder weather and less wind power generation. 

By Alex Kimani for Oilprice.com

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