Kremlin-controlled According to economists, Gazprom’s gas supplies to Europe could drop by a third this year as a result of the Ukraine situation, competition from liquefied natural gas, and plans to switch to rouble payments.

Russia supplies over 40 per cent of European gas, but the West has been attempting to wean itself off Russian energy flows with increasing urgency since Russia launched its “special military operation” in Ukraine on February 24.

Analysts say that plans to charge “unfriendly” countries in roubles for gas shipments have harmed prospects for Russian gas exports, since Europe dismissed the plan as “blackmail” and refused to cooperate nearly unanimously.

According to Sergei Kapitonov of Moscow’s Skolkovo School of Management’s Energy Centre, Gazprom’s deliveries to Europe could drop by 40 billion to 45 billion cubic metres (bcm) this year, down from over 150 bcm in 2021.

Pipeline flows could fall even lower, according to Sindre Knutsson, head of gas market analysis at Rystad Energy, “led by a push by customers to become less dependant on Russia, or by Russia holding back volumes, for example due to a disagreement over which currency the gas should be paid in.”

He also didn’t rule out a halt in supplies through Ukraine if the fighting makes pipeline operations too dangerous to continue.

Gazprom has not stated what it expects to achieve in terms of gas shipments to Europe.

There was no comment on the issue from the company.

In 2021, Germany, Italy, and Austria were the top consumers of Gazprom’s gas in Europe, with 45.8 billion cubic metres consumed, 20.8 billion cubic metres consumed, and 13.2 billion cubic metres consumed.

Russia is Germany’s primary gas supplier, supplying slightly under a third of the country’s gas, whereas Italy imports 40 per cent of its gas and Austria imports 80% of its natural gas.

Only Hungary has agreed to use the gas-for-roubles system, which entails buyers paying in foreign currency to Russia’s Gazprombank, which then converts the money into roubles. 

Last Monday, an internal European Commission memo stated that European Union purchasers paying for Russian gas in roubles would violate the EU’s sanctions against Moscow.

Russian pipeline gas, according to Alexei Gromov of the Institute for Energy and Finance Foundation, might be largely replaced by sea-borne liquefied natural gas from the United States and Russian company Novatek, which does not have to charge consumers in roubles.

According to Gromov, Russian pipeline gas shipments to the European Union could surpass 105 billion cubic metres this year.

(Adapted from Business-Standard.com)