December 18 (Reuters) – European natural gas futures declined as Slovakia’s efforts to maintain gas transit through Ukraine raised hopes for continued energy supply in the region during the upcoming year.
Slovakia’s Efforts to Secure Gas Flow
Slovakia, a significant buyer of Russian gas transported through Ukraine, has been in talks with both Moscow and Kyiv. Prime Minister Robert Fico is set to discuss potential “elegant alternative technical solutions” with European Commission President Ursula von der Leyen on Thursday, according to reports from News.Az, citing Bloomberg.
“We have solutions so that Ukraine does not transit Russian gas, but instead, it will be gas owned by someone else,” Fico said, though he did not provide further details.
Urgency to Reach an Agreement
Time is running out to avoid a halt in gas deliveries through Ukraine, with a key transit deal set to expire at the end of the year. While the European Union has reduced its reliance on Russian gas, and Brussels has stated it is not interested in continuing Russian flows, Eastern European nations are pressing for a resolution.
Various options have been suggested to keep gas flowing, including the use of intermediaries. Earlier this year, Azerbaijan’s Socar was mentioned as a potential mediator. However, analysts at Inspired Plc cautioned that these discussions remain speculative, and no firm agreements have been made.
Concerns Over Depleted Gas Inventories
Europe’s gas inventories have been depleting faster than usual this winter, which has contributed to a price rally earlier in December. A potential halt in gas transit through Ukraine could accelerate this trend. Goldman Sachs has warned that storage levels could drop to 39% by the end of the heating season, far below the 53% level seen this year.
However, the continent is expected to refill its inventories next summer, but Goldman Sachs analyst Samantha Dart noted that this depends on several factors, including no delays in upcoming export projects and “moderate” growth in Asian demand for liquefied natural gas (LNG).
Mild Weather and Lower LNG Demand Keeping Prices Stable
Meanwhile, mild weather is expected in northwest Europe until early January, helping to ease pressure on gas prices. Traders are also winding down their positions ahead of the holiday season. The combination of higher wind energy generation and weak LNG demand from China has contributed to keeping gas prices under control for now.
