Step by step, Putin has killed off Russia's gas export market in Europe, a business that had thrived for over half a century. Why did he do it? And could it ever be revived?
I wonder if you really believe in what you wrote. Why on earth would Russia destroy the infrastructure that allowed it to blackmail Europe and potentially divide it? We all know who did this and who gains from this, for good or bad reasons —that is another issue. It is sad to look at Western press and academia falling into Putin-Russia propaganda standards
Prelude: Not filling Gazprom owned gas storage facilities in Germany in the autumn of 2021. Gazprom had purchased the largest gas storage facility in Germany a few years before the war. Starting the 2022 invasion with the German storage facility being close to empty was done to pacify Germany. It didn't work. In essence, the decision not to refill the storage was the first shot in the 2022 war.
In addition, you also missed that China would be stupid to become dependent on Russian energy. No one knows what the future holds in Russia - perhaps it will continue its path to irrelevance; perhaps it will turn West once Putin is gone. Becoming dependent on Russia would be stupid. Thus, Russia is left with mostly exporting LNG and there, Russia is not that competitive.
The author tortures words to imply what he cannot say because his academic conscience does not allow it. I can well imagine a number of very careful drafts were required for this article.
“To this day, no one knows who did it.”
To this day the author believes in Father Christmas. Joe Biden said the pipeline would never be allowed to operate. Victoria Nuland said the same. If I was the police, I think I might wish to interview these two. The United States has been trying to stop Europe buying pipeline gas from Russia since the time of Ronald Reagan. Now they have achieved that aim… for the moment. It is not Russia that is suffering; it is Europe.
"But why did Putin decide to kill off Russia’s gas business in Europe”.
In business – Gazprom is a business – if you have a bad payer who makes endless trouble even if they are paying top dollar, you walk away and you look elsewhere. In particular, you don’t want to deal with them if they steal your money and send guns to your disreputable neighbors so that they can kill you.
“In the process, Russia has systematically breached its sales contracts and alienated Europe’s gas consumers, buyers, and distributors, and outraged most of its governments. In effect, Putin has put a bullet through Russia’s business in Europe.”
Putin is a lawyer. It will be surprising if Russia is found to have breached any contracts by any unbiased court. There has already been a judgement approving Gazprom’s demand for payments in Rubles. Once the United States stops its constant pressure, of one sort or another, on European politicians, we shall see if they go back to buying Russian gas – if Russia will accept them as customers. All we know is that Putin has said that Russia will not pull up the draw bridge.
Note that, contrary to the implications in this article the first major sanctions were imposed before Russia crossed the Ukrainian frontier but rather when they, before that, recognized the Donbass Republics. They did not want anymore of their fellow Russians killed, tortured and chased from their homes.
The trouble with the Russians is that they have no sense of humor.
Dear Theophilus, I wasn't going to respond while reading your post - but the last sentence made me do it. But maybe it was a sarcasm? If the answer is positive, then please never mind everything after that sentence.
On the other hand, if it wasn't a sarcasm then I have to ask if you're speaking Russian. Your answer will be appreciated.
'In business – Gazprom is a business – if you have a bad payer who makes endless trouble even if they are paying top dollar, you walk away and you look elsewhere. In particular, you don’t want to deal with them if they steal your money and send guns to your disreputable neighbors so that they can kill you.' - so where is Gazporm walking to, again? Because if it turns around it will just smash its face into the wall (pun intended). And you forget that there would be no business for Russia had Europe not developed Russian infrastructure and created a market for Russian gas. There would be no Gazprom without the European customers. There will be no Gazprom without European customers.
Let's just hope the satrap kicks the bucket sooner rather than later and Russia will be able to walk away from its nonsensical policies saving its face, blaming it all on Putin.
"There will be no Gazprom without European customers." - Time will tell.
I don't think you mean Satrap which is a pretty good word for most of Europe's leaders. You don't seem to realise that in Russia Putin is regarded as a moderate. When he goes he is likely to be replaced by someone more hard line who does not believe that his policies are nonsensical.
Suicide for Europe maybe who's paying 400% more for gas now whose industry will be wholly uncompetitive with Asia if they were not already before. Russia is swimming in Asian cash who's quite happy Russia is looking east now. Brzezinski warned Europe not to push Russia into Asian arms but cancel culture prevailed over Brzezinski. And no its not coming back. Russians as a whole have written off the West based on my readings. Maybe Europe can colonize Africa again for cheap resources.
Yes, it is absolutely inconceivable that Europe will put itself in a position where it depends on Russian energy supplies again. But, depending on the terms of a peace settlement, some Russian pipeline gas could probably be part of the European energy balance for some time. Also interesting to see what happens with Russian LNG. In 2022, Russian LNG deliveries to Europe have increased by almost 50 per cent. Europe takes the lion's share of production from Yamal LNG. Such supplies could make sense also in the future as part of a supply diversification strategy, without creating new dependence.
You're right to flag the interesting increase in Russian LNG deliveries. Russia's private-sector LNG champion, Novatek, has been sending LNG cargoes to Europe to take advantage of the current high prices. (When they first started doing that, Gazprom complained loudly over the unwelcome competition, but Gazprom's fallen silent recently.) The big question is whether Novatek will continue shipping LNG to Europe past next year. Its business model is oriented toward Asia via the Norther Sea Route, with the strong support of the Kremlin. Novatek could be having transportation problems on that route (lack of ice-class tankers), or it may be finding Chinese prices unappealing with the current Chinese downturn. Either way, Novatek's shipments to Europe look like a short-range target of opportunity.
He has not inflicted vaste damage on Russia, he has presided over a vaste change of economic direction. That has a price but it is not damage. Lavrov has said "sanctions are a tax on independence."
The Russian élite is not monolithic. It depends who you are talking about but it would seem that at the beginning there were doubts but there is now a growing sentiment that he did the right thing in lancing the Ukrainian boil. The extreme, almost Stalinist, behaviour of the Zelensky government has done nothing to convince them otherwise.
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I wonder if you really believe in what you wrote. Why on earth would Russia destroy the infrastructure that allowed it to blackmail Europe and potentially divide it? We all know who did this and who gains from this, for good or bad reasons —that is another issue. It is sad to look at Western press and academia falling into Putin-Russia propaganda standards
You missed the prelude to the drama.
Prelude: Not filling Gazprom owned gas storage facilities in Germany in the autumn of 2021. Gazprom had purchased the largest gas storage facility in Germany a few years before the war. Starting the 2022 invasion with the German storage facility being close to empty was done to pacify Germany. It didn't work. In essence, the decision not to refill the storage was the first shot in the 2022 war.
In addition, you also missed that China would be stupid to become dependent on Russian energy. No one knows what the future holds in Russia - perhaps it will continue its path to irrelevance; perhaps it will turn West once Putin is gone. Becoming dependent on Russia would be stupid. Thus, Russia is left with mostly exporting LNG and there, Russia is not that competitive.
The author tortures words to imply what he cannot say because his academic conscience does not allow it. I can well imagine a number of very careful drafts were required for this article.
“To this day, no one knows who did it.”
To this day the author believes in Father Christmas. Joe Biden said the pipeline would never be allowed to operate. Victoria Nuland said the same. If I was the police, I think I might wish to interview these two. The United States has been trying to stop Europe buying pipeline gas from Russia since the time of Ronald Reagan. Now they have achieved that aim… for the moment. It is not Russia that is suffering; it is Europe.
"But why did Putin decide to kill off Russia’s gas business in Europe”.
In business – Gazprom is a business – if you have a bad payer who makes endless trouble even if they are paying top dollar, you walk away and you look elsewhere. In particular, you don’t want to deal with them if they steal your money and send guns to your disreputable neighbors so that they can kill you.
“In the process, Russia has systematically breached its sales contracts and alienated Europe’s gas consumers, buyers, and distributors, and outraged most of its governments. In effect, Putin has put a bullet through Russia’s business in Europe.”
Putin is a lawyer. It will be surprising if Russia is found to have breached any contracts by any unbiased court. There has already been a judgement approving Gazprom’s demand for payments in Rubles. Once the United States stops its constant pressure, of one sort or another, on European politicians, we shall see if they go back to buying Russian gas – if Russia will accept them as customers. All we know is that Putin has said that Russia will not pull up the draw bridge.
Note that, contrary to the implications in this article the first major sanctions were imposed before Russia crossed the Ukrainian frontier but rather when they, before that, recognized the Donbass Republics. They did not want anymore of their fellow Russians killed, tortured and chased from their homes.
The trouble with the Russians is that they have no sense of humor.
Dear Theophilus, I wasn't going to respond while reading your post - but the last sentence made me do it. But maybe it was a sarcasm? If the answer is positive, then please never mind everything after that sentence.
On the other hand, if it wasn't a sarcasm then I have to ask if you're speaking Russian. Your answer will be appreciated.
I am afraid it was a little sarcasm.
'In business – Gazprom is a business – if you have a bad payer who makes endless trouble even if they are paying top dollar, you walk away and you look elsewhere. In particular, you don’t want to deal with them if they steal your money and send guns to your disreputable neighbors so that they can kill you.' - so where is Gazporm walking to, again? Because if it turns around it will just smash its face into the wall (pun intended). And you forget that there would be no business for Russia had Europe not developed Russian infrastructure and created a market for Russian gas. There would be no Gazprom without the European customers. There will be no Gazprom without European customers.
Let's just hope the satrap kicks the bucket sooner rather than later and Russia will be able to walk away from its nonsensical policies saving its face, blaming it all on Putin.
"There will be no Gazprom without European customers." - Time will tell.
I don't think you mean Satrap which is a pretty good word for most of Europe's leaders. You don't seem to realise that in Russia Putin is regarded as a moderate. When he goes he is likely to be replaced by someone more hard line who does not believe that his policies are nonsensical.
Suicide for Europe maybe who's paying 400% more for gas now whose industry will be wholly uncompetitive with Asia if they were not already before. Russia is swimming in Asian cash who's quite happy Russia is looking east now. Brzezinski warned Europe not to push Russia into Asian arms but cancel culture prevailed over Brzezinski. And no its not coming back. Russians as a whole have written off the West based on my readings. Maybe Europe can colonize Africa again for cheap resources.
Yes, it is absolutely inconceivable that Europe will put itself in a position where it depends on Russian energy supplies again. But, depending on the terms of a peace settlement, some Russian pipeline gas could probably be part of the European energy balance for some time. Also interesting to see what happens with Russian LNG. In 2022, Russian LNG deliveries to Europe have increased by almost 50 per cent. Europe takes the lion's share of production from Yamal LNG. Such supplies could make sense also in the future as part of a supply diversification strategy, without creating new dependence.
You're right to flag the interesting increase in Russian LNG deliveries. Russia's private-sector LNG champion, Novatek, has been sending LNG cargoes to Europe to take advantage of the current high prices. (When they first started doing that, Gazprom complained loudly over the unwelcome competition, but Gazprom's fallen silent recently.) The big question is whether Novatek will continue shipping LNG to Europe past next year. Its business model is oriented toward Asia via the Norther Sea Route, with the strong support of the Kremlin. Novatek could be having transportation problems on that route (lack of ice-class tankers), or it may be finding Chinese prices unappealing with the current Chinese downturn. Either way, Novatek's shipments to Europe look like a short-range target of opportunity.
Thanks for this insightful piece.
I wonder how Putin is actually perceived by the Russian elite after all the vast damage his has done to Russia.
He has not inflicted vaste damage on Russia, he has presided over a vaste change of economic direction. That has a price but it is not damage. Lavrov has said "sanctions are a tax on independence."
The Russian élite is not monolithic. It depends who you are talking about but it would seem that at the beginning there were doubts but there is now a growing sentiment that he did the right thing in lancing the Ukrainian boil. The extreme, almost Stalinist, behaviour of the Zelensky government has done nothing to convince them otherwise.
We don’t expect public figures to walk naked down a freezing road...