Russia’s state-owned company Gazprom, the country’s largest gas producer, produced 14 percent less natural gas in July than in June. Production is now at its lowest point since 2008.
It’s all because of the Russian invasion of Ukraine. After the Kremlin started the war in February, Europe imposed a large number of sanctions on the country. In retaliation limited dictator Vladimir Putin the gas export to Europe, which threatens to cause a major energy crisis in our country.
But in doing so, Putin shot himself in the foot. After all, Europe is the largest market for Russian gas. Although China and India are now taking advantage of the situation by buying natural gas at reduced prices, this does not compensate for the decreased export to Europe.
For that reason, the numbers are not great. The Russian gas giant produced an average of 774 million cubic meters per day in July, a 14 percent decrease compared to June. reports Bloomberg. Total output for this year is down 12 percent compared to the same period in 2021.
Exports to countries outside the former Soviet Union even fell by about 22 percent. This is despite the fact that China imported record quantities in the past month.
Long-term
An important caveat must be made about the figures. The earnings of oil and gas exports to Europe doubled since the beginning of the war, evidenced by numbers of the International Energy Agency (IEA).
Nevertheless, the Russian economy will take a serious blow in the long term, according to a analyse from Yale University. A combination of Western sanctions, reduced exports and a Western world that is now trying to make itself less dependent on Russian gas by seeking other sources, the future for Russia would not look bright.
“The importance of global commodity exports to Russia far outweighs the importance of Russian commodity exports to the rest of the world,” the analysis reads. As natural gas supply chains are rearranged and Europe becomes less dependent on Russian oil and natural gas, the country’s economy could lose an important source of income forever.
Europe looks elsewhere
Meanwhile, Europe is trying to find other suppliers. Italy, for example, has recently started importing a larger amount of natural gas from Algeria. Other countries in Africa are also potential candidates to satisfy Europe’s hunger for gas. The United States is also contributing: they already have this year more natural gas delivered than during the entire year 2021.
That Putin is now looking to Asia to dump its natural gas at cheaper rates is not a good sign for Russia, according to Yale’s report. It now trades from a weak position due to the loss of its former major markets. Russia’s strategic position as an exporter of raw materials is said to have “deteriorated irrevocably”.
(fjc)
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