Russia threatened on Tuesday to cut off gas supplies to Europe through the Nord Stream 1 pipeline in response to sanctions imposed by the West over its invasion of Ukraine. Deputy Prime Minister Alexander Novak has stated that Moscow has every right to take action if new sanctions are imposed on its energy exports. The gas ban, if passed, could add to the turmoil in energy markets and further fuel the spike in energy prices. But it would also have important consequences for the Eurasian giant, an economy highly dependent on fossil fuel exports (gas and oil) and which needs this source of income now more than ever.
“Europe consumes around 500,000 million cubic meters of gas a year, and 40% comes from Russia. For decades, Russia has been a reliable partner, come what may. And even now, Gazprom fully complies with its contractual commitments, its obligations to deliver gas to Europe”, the deputy prime minister recalled in statements collected by the Interfax agency. The markets have barely reacted to Novak’s statements because they consider that it is one more sting in Russia’s warmongering escalation, a campaign that they need to finance with the same gas that they threaten to cut off.
Europe’s dependence on Russian gas has been a key factor in efforts by the continent’s leaders to agree on how to respond to the invasion of Ukraine. Last February, when the invasion began, Germany canceled the Nord Stream 2 gas pipeline project with an investment of 11,000 million. Now EU officials say they are working on a plan to cut the bloc’s import needs from Russia by almost 80% this year. And some of the countries that most need Russian supplies, such as Italy, see it as feasible to completely break ties with that country in a maximum of two and a half years.
The announcement by the Russian deputy prime minister comes after several days of strong bullishness in European gas markets, with prices rising by almost 80% due to fears of a disruption in supplies from Russia or, more recently, an expansion Western sanctions, so far very careful in excluding the energy sector.
He knows in depth all the sides of the coin.
Shipments to Europe through Ukraine have increased to 109 million cubic meters per day, according to figures provided by Novak, which equates to shipments to Europe of around 40 billion cubic meters per year. “Transit is being fulfilled 100% to this day. But at the same time, following the baseless accusations against Russia regarding Europe’s energy crisis and the ban on Nord Stream 2, we have every right to retaliate and impose an embargo on gas pumped through Nord Stream 1.” has added.
The decision has not yet been made, according to the deputy prime minister, who has recalled that with mutual sanctions on gas “nobody wins (…) despite the fact that European politicians, with their claims and accusations, are pushing us towards it . Once again, European officials are trying to blame Russia for their problems and the mistakes of their own energy policy in recent years,” he said, while denying any responsibility for the recent increase in prices and volatility. of the gas market. “Russia has nothing to do with it,” he has settled.