Gas weapons have reached the limit

Stopping Nord Stream for an indefinite period forces us to rethink the entire current situation in gas relations between Russia and the EU. Until now, the Russian Federation, taking advantage of Europe’s high dependence on its energy resources, could successfully achieve a unilateral change in gas contracts (switch to rubles) and at the same time gradually reduce the volume of supplies, inflating gas prices in the EU. Obviously, the main goal was to put pressure on the authorities of key states, which was supposed to help resolve the current large-scale differences in the security sphere.

But it is also very important that this approach allowed both Gazprom and the state (through the mineral extraction tax, gas export duty and Gazprom dividends) to earn additional trillions of rubles, despite the fact that the physical volume of gas exports was declining. After all, it was more important for Europe to receive gas, albeit at a huge price, than to lose it altogether.

But now supplies have fallen so much that it no longer makes sense for the key countries of Europe to make any concessions. So, on September 4, for example, shipments of Russian gas to Germany amounted to only about 5 million cubic meters of the country’s 270 million cubic meters of consumption (less than 2%). Gazprom has not been delivering to France since the end of August. Unsurprisingly, Chancellor Olaf Scholz and President Emmanuel Macron now agree with Italian Prime Minister Mario Draghi that a price ceiling should be imposed on imported Russian gas.

If such a decision is made, Russia, of course, will not agree with it, and Gazprom, in accordance with the decree of the President of the Russian Federation of March 31, will stop deliveries to customers who do not fully pay their bills. And although gas prices in Europe will rise again, Gazprom itself will lose about half of its revenue, since it is unable to redirect gas to other markets. Such a development of events looks very likely, since the countries of Western Europe already, in fact, have nothing to lose. But by severing this painful gas tie with the Russian Federation, won’t they become even less willing to compromise with Moscow?

However, there are still countries in the EU where Russian gas goes regularly – for example, Hungary. And if it does not join the decision on the price ceiling – and there is no formal way to force Budapest to do so, since in the EU countries independently determine energy policy – this will create a potentially extremely dangerous precedent for Europe.

As German businesses shut down indiscriminately due to high gas prices and the Eiffel Tower’s lights turn off in Paris due to power shortages, Hungarian consumers can safely fry eggs for breakfast without fear of immediate ruin. Hardly anyone can now say what political consequences this contrast will lead to.