Checkmate, Putin: Cutting gas to Europe before Ukraine war would cost Russia £170m a day

Russia: Putin could start ‘nuclear armageddon’ says Ostalski

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Russia has already been slashing volumes of gas travelling into Europe through its vast network of pipelines in recent months, which has seen EU prices skyrocket to record highs. For more than 30 days straight, gas from the Yamal-Europe pipeline has been diverted east, prompting December prices to surpass October records. And Russia’s state-owned gas giant, Gazprom, has made huge profits from rising prices.

The Kremlin-backed company reported net profits of £5.87billion between July and September.

The record surpassed its previous highest quarterly profit of £5.41billion from the first quarter of 2019.

Now, Mr Putin has been warned that cutting off that gas completely might not be the best idea.

Ukraine is a key transit country needed for Russia’s gas to reach Europe, and heated tensions with Moscow has prompted fears of a Russian invasion.

With over 100,000 troops stationed at the Russia-Ukraine border, the West has been scrambling to stop the Kremlin with threats of sanctions among other measures.

But Mr Putin may want to consider this move, which could be catastrophic for Russia and Gazprom.

These fears may not even be justified, argues Thane Gustafson, the author of a book on Russian energy called “Klimat”.

He told The Economist: “I don’t think it is unlikely at all that Putin would actually reach for the gas tap over Ukraine.”

And that is likely because of the enormous revenue that gas generates for Russia.

Jaime Concha of Energy Intelligence predicts that a complete cut-off of Europe’s pipeline gas would cost Gazprom between $203million (£150.73million) and $228million (£169.30million) a day in lost revenues.

If such an embargo lasted for three months (Mr Putin’s control over gas prices drops in spring as demand drops to 60 percent of that in January), lost sales would add up to about $20billion (£14.85billion) in total.

But at the same time, Russia today has nearly £450billion in its central-bank reserves.

The Economist reported that it could easily handle the three-month loss of gas sales.

And Germany might be the most at risk due to its decision to phase out all nuclear power plants by the end of the year, a move that has made it even more reliant on Russian gas.

So much so in fact that it struck a deal for a new pipeline, Nord Stream 2, that will transit gas from Russia to Germany via the Baltic Sea, bypassing Ukraine and Poland.

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But this has been hit with delays and Mr Putin has been pushing to speed up the approval process.

Now, the US has called on Germany to scrap the pipeline if Russia invades Ukraine, which it believes could be “leverage” to discourage an invasion.

But the US has drafting up measures for the event that Russia may further “weaponizes” gas.

The Biden administration has called for an increased production of liquefied natural gas (LNG) around the world.

This would mean that Europe could fall back on increased supplies coming from companies in the Middle East, North Africa and Asia if Russian gas supplies dip further or even get cut.

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