Faced with the growing tension in Europe with Russian actions against Ukraine, Germany announced, unsurprisingly, a first “sanction” against Russia, namely the suspension of the authorization for the commissioning of the Nord Stream 2 pipeline that can deliver Russian gas to Germany and the rest of Europe.
Posted at 12:00 p.m.
The belligerent attitude of Russia, the main supplier of gas in Europe, well aware of the sanctions it will suffer in the event of further territorial advances in Ukraine, is nothing less than a frontal maneuver against the Europe’s energy security.
In the energy industry, it is well known that the first quality of a supplier is its reliability. As we know, the modern world relies on a reliable and continuous flow of energy: any break in this flow is highly disruptive, in all sectors, without exception.
And this, in the middle of the winter season, with rising gas prices already putting millions of households in difficulty having to heat themselves at great expense, and industries forced to slow down their production.
The Americans have always denounced this European energy dependence on Russia.
Germany, the main customer of Russian gas, and main supporter of the Nord Stream 2 project, has always been quick to maintain that Russia would honor its commitments without getting into geopolitics. She now looks very bad in this story.
However, the consequences of the situation on the side of Russia are major for it in the short and medium term.
In 2021, Russia’s budget revenues are based for more than 35% on its oil and gas sales. This country has regained its place on the world energy chessboard for 20 years. It has become an important player in global oil supply alongside the Organization of the Petroleum Exporting Countries (OPEC), as well as a strategic gas supplier, in Europe, but also to its Chinese neighbour.
However, the message currently sent by Moscow to its current and future partners is that in the event of disputes, it will not hesitate to place its political interests beyond their energy security. This is the worst message to send to countries that place their trust in a supplier for such a critical mission.
In 1986, following a sharp drop in oil prices, the Soviet Union suffered a drastic drop in income. It was unexpected for her, and very unwelcome. Its income is collapsing: it is struggling to import foodstuffs to feed its population.
In 1991, two years after the fall of the Berlin Wall, the Soviet regime, whose economy was cracking everywhere, collapsed…
Thirty years later, an invasion of Ukraine would place Russia under international opprobrium, once again undermining its financial capacity.
It is difficult to understand why Putin wants to replay his country in this bad film…
Moreover, by giving Russia a bad reputation as an energy supplier, Putin’s actions further open the lucrative European gas market to his enemy, the United States.
In 2021, Americans supplied 26% of liquefied natural gas (LNG) to Europe, and as of January this year, more than 50% of Europe’s imported LNG came from the United States.
For the gas sector in our southern neighbour, the current situation is an unprecedented opportunity: that of becoming, for the European continent, the new reliable supplier on which, ultimately, we can count.