The Kremlin warned on Wednesday that European consumers could face higher prices unless Kyiv agrees to extend the Russian gas transit deal through Ukraine, which is set to expire on Dec. 31.
Ukraine has repeatedly said it has no plans for a new gas transit deal with Russia amid the ongoing military conflict.
There is also some concern that flows could stop prematurely amid fighting in the Kursk region of Russia, where the gas transit point into Ukraine, Sudzha, is located.
Kremlin spokesperson Dmitry Peskov told reporters on a daily conference call on Wednesday that if Kyiv did not extend the deal, Russia could find alternative routes, such as the planned Turkish gas hub.
"There are alternative routes and plans to create a hub in Türkiye. This work is in progress," Peskov said.
"But, of course, such decisions by the Ukrainian side will cause serious damage to the interests of European consumers, those who still want to buy more guaranteed, more affordable ... Russian gas," he added.
He also said that Europe will have to pay more for gas from other sellers, including liquefied natural gas (LNG) supplied by the United States.
In 2022, Russia proposed setting up a gas hub in Türkiye to replace lost sales to Europe, supporting Ankara's long-held desire to function as an exchange for energy-starved countries.
Negotiations are still ongoing, and key Russian and Turkish institutions have been discussing the project road map.
The transit agreement to deliver Russian gas to Europe via Ukraine last year still totaled 15 billion cubic meters (bcm) out of total EU gas consumption of 295 bcm.
Most recipients of Russian gas via Ukraine have said they have been preparing for flows to cease at the end of this year when the deal expires, given that Ukraine has said it does not want to renew it.
Another option is for Gazprom to supply some of the gas via another route, such as TurkStream, Bulgaria, Serbia or Hungary. However, capacity via these routes is limited.
The European Union and Ukraine have also asked Azerbaijan to facilitate discussions with Russia regarding the deal.
Even as the continent heads into the winter with full storage, the future of Russian gas transit remains a key uncertainty for European gas prices, the chief executive of TotelEnergies said on Monday.
"One of the main factors about this transit for Ukraine is because even if the storage is full, I'm not sure we will be fully covered if this is interrupted," TotelEnergies CEO Patrick Pouyanne told an interview with Reuters.
European gas storage levels were last seen 91.2% complete, having hit a Nov. 1 target two months early, Gas Infrastructure Europe data showed.
The gas market in Europe will continue to be exposed to volatility as there is not much new supply to be added, Pouyanne added, highlighting delays to new liquefied natural gas projects like Golden Pass in the United States.
"So we are still in a phase where we don't have much margin on the supply for energy," he added.
This situation was likely to prevail until 2027, the CEO said.
The natural gas price had risen above 40 euros ($44) to its highest since December earlier this month over fears the transit could stop amid the fighting in Kursk.
