What are the possible implications of the disruption of Russian gas supplies from Europe?
Russian giant Gazprom on Wednesday cut off all gas exports to Bulgaria and Poland, in a decision that raised fears of supply shortages, not only in Eastern and Central Europe but on the entire old continent.
In the light of the Russian invasion of Ukraine and the resulting political and economic developments reflected in the current situation in the gas market in the light of the invasion, questions arise about the reasons and motives that led to that decision and its possible implications.
Why did Moscow cut off gas supplies to Poland and Bulgaria?
In response to EU sanctions imposed on Russia for invading Ukraine, the Kremlin warned EU member states supplying gas from Russia that such supplies would stop if they did not pay for them in Russian rubles, not in euros or dollars as they have been so far.
Russia explained that gas prices would continue to be denominated in the currency stipulated in their contracts with European countries, often the euro or the dollar, but that the price of gas would no longer be met in this currency but in Russian roubles, which meant that the countries concerned had to make currency transfers in Russia.
Kremlin spokesman Dmitry Peskov said Wednesday that "the conditions set are part of a new payment method formulated after unprecedented unfriendly measures."
However, this emerging Russian requirement has been answered by a number of European countries concerned, including France, Germany and Poland, in Nyet (both in Russian).
According to Claudia Kimfert, an energy expert at the German Institute for Economic Research (DIBLio Berlin), "stopping Russian gas supplies to Poland and Bulgaria is the new step in Putin's escalation to cause panic in Europe."
However, the expert reassured that "supply problems should not be expected at this time, as Germany and Europe are adequately supplied with gas".
What weight of Europe in Russia's revenues from the sale of gas?
Based on current market prices, Russian gas exports to the EU alone amount to $400 million per day, according to the International Energy Agency.
According to Gazprom Export, 68% of exports from Russian gas giant Gazprom in 2020 went to Europe.
Of the total exports of 174.9 billion cubic meters, 119.35 billion cubic meters went to Europe, of which approximately 49 billion cubic meters were in Germany alone, about 21 billion cubic meters in Italy and more than 13 billion cubic meters for Austria.
According to the International Energy Agency, "in January 2022, income from gas and oil exports accounted for 45% of Russia's federal budget."
Poland declares "independence" from Russian gas
Polish Prime Minister Mateusz Muraftsky said his country, which consumes up to 21 billion cubic meters of gas annually, is "ready to face a situation in which Russian gas is completely cut off."
Poland itself is a gas producer with a production capacity of about 4.5 billion cubic meters, and the country has an LNG plant with a current capacity of 6.5 billion cubic meters of gas, which is expected to soon increase to 8 billion cubic meters.
According to the Polish government, the country's gas reserves are 76% full, and Poland has a gas transport network connecting it to all its neighbors.
Poland relies primarily on the Baltic Pipe gas pipeline, which will enter service in October, which will allow the transport of up to 10 billion cubic meters of Norwegian gas to Poland via Denmark.
"We'll manage even with this gun to our head," Muraftsky said Wednesday.
