A geopolitical conflict has assumed the character of an economic war with the European Union accusing Russia of “blackmail” in the context of Gazprom’s move to halt gas supplies to some European customers. The EU has couched its condemnation with a note of caution, specifically that it is working on what it calls a “coordinated response to Moscow’s escalation”. Gazprom, a Russian company, has cut supplies to Poland and Bulgaria for their failure to pay for gas in roubles. This ranks as Moscow’s toughest response yet to sanctions imposed by the Western powers over the war in Ukraine. “The announcement by Gazprom that it is unilaterally stopping delivery of gas to customers in Europe is yet another attempt by Russia to use gas as an instrument of blackmail”, is the immediate response of the European Commission president, Ursula von der Leyen. “This is unjustified and unacceptable. And it shows once again the unreliability of Russia as a gas supplier.” The latest scenario should not really surprise the EU; the sanctions on Russia and Moscow’s consequent insistence on rouble payments were announced weeks ago.
The EU will thus continue its work to ensure alternative supplies of gas. EU rules require all countries to have a contingency plan to cope with a gas supply shock. EU gas storage is currently 32 per cent full. The entity’s “gas coordination group”, so-called, consisting of representatives from the national governments and the gas industry are scheduled to meet very shortly. While the recent missile attack on five railway stations in Ukraine hasn’t yielded the degree of shock and awe that was expected, Moscow’s closure of Europe’s gas pipes almost certainly has. Poland has let it be known that its energy supplies are secure and there was no need to limit supplies to consumers. But overall, the impact of the Kremlin’s move against the supply of gas has been palpable almost throughout Europe. Germany, for instance, is gearing up for a change of control at the PCK refinery in Schwedt that is operated by the Russian state-owned Rosneft that accounts for all of Germany’s remaining Russian oil imports. Germany is formulating plans to become independent of Russian oil.
This would make an oil embargo by the UN manageable for Europe’s biggest economy. It has reduced the proportion of oil it sources from Russia to 12 per cent from 35 per cent, leaving PCK as the only remaining consumer of Russian oil in the country. PCK supplies gas to parts of eastern Germany, including the capital, Berlin, as well as western Poland. Under plans formulated by Germany’s economy minister, Robert Habeck, the country is inching towards an agreement with Poland. It envisages that part of the supply for PCK would be shipped via the German Baltic Sea port of Rostock. This will of course call for a degree of solidarity with Poland. Overall, an energy-dependent Europe will be seeking ways to either circumvent Russia’s tough conditions or the West’s sanctions to ensure there are no disruptions in the short term. But it will not be easy.