Russia on all energy fronts

Russia has been stepping up its interventions in recent days in an attempt to place itself at the center of the debates on the European energy crisis. President Vladimir Putin may be tempted to play the gas supply card to obtain concessions from Europe. But it is a double-edged bet for Moscow.

Is the energy crisis making the Kremlin the master of the game? In the west, President Vladimir Putin called on Wednesday, October 13, for efforts to “stabilize” the gas market in Europe, where prices have soared in recent weeks. East, Beijing knocked on the Russian door the same day to be able to import more coal, electricity and gas to overcome its own energy crisis.

“In the short term, Russia is in a comfortable position, if only because of the gas tariff”, assures Arild Moe, specialist in the Russian energy sector at the Norwegian Institute Fridtjof Nansen, contacted by France 24 .

Moscow in a strong position

Its price has, in fact, bondi by more than 170% since the beginning of the year, which is very good news for the finances of Moscow which, through Gazprom, is the main supplier of gas to Europe.

“It has been as long as Moscow had not been in such a strong position to negotiate with European countries,” adds Agata Łoskot-Strachota, specialist in European energy policy at the Center for Oriental Studies in Warsaw, contacted by France. 24.

Europe believes, in fact, that Moscow has the means to quench its thirst for natural gas. “Russia certainly has some leeway because Gazprom has never done more than honor the terms of its supply contracts with Europe,” recalls Arild Moe. Brussels hopes that the gas giant draws on its reserves.

Several experts were surprised, in June, at the restraint of the Russians who had not tried to sell more gas to Europeans when prices were already starting to rise. “These analysts suggested that Moscow was exacerbating the price spike [en limitant l’approvisionnement en gaz, NDLR] in order to force the hand of Europeans to let them finish building the Nord Stream 2 gas pipeline ”, recalls the Financial Times.

But since this summer, the last stone in the controversial pipeline connecting Russia to northern Germany has been laid. It still remains to obtain the agreement of the German regulator and “Russia can now tell Europeans that if they were less finicky about the procedures, it could quickly have more gas available which would therefore be cheaper”, summarizes Arild Moe.

The Russians are not, however, just thinking of the Nord Stream 2 pipeline. They may be thinking bigger. Vladimir Chizhov, the Kremlin’s ambassador to Brussels, suggested in a rather unsubtle way that the EU would do well to “nno longer perceive Russia as an adversary”, If the 27 expect to obtain more gas than what was foreseen in the contracts.

Moscow could thus seek to “take advantage of its strong position to obtain concessions in relation to a certain number of European regulations which thwart them, such as the climate-energy package currently being discussed in Brussels”, considers Agata Łoskot-Strachota. According to her, Moscow could even be tempted to put the eternal question back on the table. economic sanctions imposed by the European Union in response to the annexation of Crimea in 2014.

The current crisis also allows the Kremlin to put Europe “in front of the contradictions of its energy policy”, estimates Vladimir Kutcherov, specialist in energy issues at the Royal Institute of Technology in Stockholm, contacted by France 24. “There Until a few years ago, the European energy market was very stable with 10 to 15 year contracts between Europe and Russia. Then, Brussels wanted to introduce more flexibility to reduce its dependence on Russian gas [c’est-à-dire moins de contrats à long terme], which has led to more price volatility and has contributed to the current crisis situation ”, summarizes this Russian scientist, who is amused to see Europe come back to Moscow to ask for more gas.

Energy blackmailer

“Of course, Gazprom would like to encourage the EU to sign more long-term contracts to secure outlets at a time when Europe is increasingly developing renewable energies as an alternative,” confirms the Polish researcher. Agata Łoskot-Strachota.

But be careful not to push the plug too far, assure the experts interviewed by France 24. First of all, Moscow would be wrong to make Europe believe that Gazprom can solve the energy price crisis at once. of magic wand. “It could be quite deceptive to give the prospect of a way out of the crisis and that could backfire on Russia,” warns Agata Łoskot-Strachota.

Indeed, Gazprom “has a certain leeway to increase its deliveries, but not that much either because winter is also starting in Russia, and we must also think about the needs of the internal market”, underlines Catherine Locatelli, specialist in the Russian oil and gas industry at the Grenoble Applied Economics Laboratory, contacted by France 24.

Vladimir Putin would also do well not to come across as an energetic blackmailer. “This would damage the image of a reliable trading partner that Russia seeks to cultivate and could harm the country in the longer term,” said Arild Moe of the Norwegian Fridtjof Nansen Institute.

If Europe emerges from this crisis convinced that Moscow is taking every opportunity to use its natural resources as diplomatic weapons, “this will push Brussels to redouble its efforts to find alternatives to Russia and to further diversify its sources of supply. in energy ”, concludes this expert.

Above all, “if the main supplier of natural gas to Europe is deemed unreliable, it is the reputation of the gas as a whole that will suffer, and encourage Brussels to give a boost to the development of renewable energies” , notes Agata Łoskot-Strachota. And Moscow, still very dependent on its hydrocarbon exports, has little to offer in this area.

All roads lead to Beijing?

So many risks that the Kremlin could ignore if the outlets in Asia offset any losses in market share in Europe. Statements from China, which intends to import more Russian coal and gas, make it clear that there is potential. “It is obvious that Russia would like to favor China, which intends to continue using natural gas while Europe wants to switch to renewable energies as much as possible,” confirms Catherine Locatelli.

But for now, China is still far from being able to take over. There is only one pipeline that can deliver a maximum of 38 billion m3 of gas per year to China. This is a far cry from the more than 200 billion m3 per year that Russia can sell to Europe.

Moscow and Beijing will “perhaps take advantage of this crisis to accelerate the construction of the second gas pipeline, called Power Siberia 2”, notes the German daily Süddeutsche Zeitung. But even this second link will “at best only double the volume of gas delivered to China”, underlines Agata Łoskot-Strachota.

In other words, Russia will continue to remain dependent on its European buyers for some time to come. The way in which Moscow will manage this energy crisis in Europe is, therefore, “a moment of truth for Vladimir Putin, either he shows that he is aiming for short-term profits due to high gas prices, or he shows that he favors the stability of the long-term relationship with Europe ”, concludes the Polish researcher. Norwegian specialist Arild Moe does not have too many doubts about the option favored by the master of the Kremlin: “He has always shown that he is a very fine tactician, but rather a poor long-term strategist”.

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