Russia will not freeze Europe
Russia, due to the full-scale invasion of Ukraine, has lost the status of the main exporter of gas, which it managed to maintain for 50 years. And, unlike oil, it turned out to be impossible to find an alternative market for gas. To transport it, you need to build an expensive infrastructure. Russia’s gas revenues fell by almost 45% to 710 billion rubles (6.8 billion euros or $7.4 billion) in the first five months of 2023 compared to the same period last year.
As writes DW, Gazprom reported a loss of 18.6 billion rubles in the second quarter due to reduced flows to Europe. Russia’s EU market share has plummeted to around 10%, even as it struggles to divert spare gas. Russian pipeline gas exports to Europe fell by almost 60% to 62 billion cubic meters in 2022, prompting Gazprom to cut production by a fifth.
Russia is seeking to use former Soviet republics such as Kazakhstan and Uzbekistan to sell its gas, increase LNG exports, and expand its domestic gas network to keep the gas flowing. She is also betting on an alternative route to Europe, but details remain vague.
Moscow sees China as an alternative to the huge European market. But this will require the construction of new pipelines in addition to the existing Power of Siberia pipeline. Continued Russian gas supplies, though a small fraction of what the EU has previously bought, have led to calls for a phase-out of LNG imports, which increased by 37% last year to 22 bcm. Belgium, France and Spain bought record volumes from Russia in 2022.
Countries such as the Netherlands and Spain are taking steps to stop buying Russian LNG, but in the absence of any sanctions, it could take some time to phase out Russian gas. As for Moscow, its gas war, which led to the EU finding new suppliers and accelerating the transition to a green economy, has forever undermined Russia’s status as Europe’s main supplier of gas.
As OBOZREVATEL reported, Naftogaz launched a mechanism for the forced recovery of compensation from Russia for assets in the temporarily occupied Crimea in accordance with the decision of the Hague Arbitration. Its size is 5 billion dollars.
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2023-09-01 21:12:00
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