James Herron, Bloomberg News

LONDON
EnergiesNet.com 04 15 2022

– President Vladimir Putin said Europe currently has no alternative to Russian gas supplies, and any attempt to wean off those deliveries will have massive, negative consequences for the continent’s economy.

“A reasonable replacement for Europe simply does not exist,” Putin said in a televised speech while opening a meeting on current challenges for Russia’s energy business. “There are simply no spare volumes in the global market, and deliveries from other countries, primarily the U.S., which may be sent to Europe, will cost the consumers many times more.”

The warning comes just weeks before European buyers of Russian gas need to start paying for April deliveries. Putin ordered that nations considered “unfriendly” must start paying for supplies in rubles. 

A preliminary analysis by the European Commission concluded that switching to the Russian currency would violate sanctions imposed on Moscow following the invasion of Ukraine. Most of the April payments for gas contracts in Russia are due in May and it’s not yet clear how governments and companies are going to respond.

Earlier this month, Putin warned that any refusal to pay in rubles would result in a cutoff of deliveries.

At Thursday’s meeting, Putin didn’t reiterate his warnings of any potential cutoffs, but he said his government sees “issues with payments for Russian export energy supplies, as banks from the unfriendly states delay money transfers.” He didn’t elaborate.

Putin Says Russia Seeks New Markets as West Rejects Oil Exports

In the meantime, Russia will work on weaning itself off a reliance on energy buyers from the West, Putin said.

“We will assume that in the foreseeable future, westbound energy supplies will be shrinking,” he said. “This is why it’s important to solidify the trend of the past several years, and step by step redirect our exports to the fast-growing markets of the south and the east.”

Some redirection of Russian volumes is happening now in the oil market. Many key buyers either refuse to take Russian cargoes or pledge not to once their contracts expire. Still, Russia has been able to send some of the oil flows to Asia, luring buyers with deep discounts.

Redirecting Russian natural gas flows from Europe to Asia isn’t possible because the nation’s eastbound and westbound pipeline systems operate independently. Gazprom PJSC is considering building an interconnector if it signs a third supply contract with China.

bloomberg.com 04 14 2022