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Europe’s Resilience: Putin’s Gas Export Strategy Backfires



Since Russia’s invasion of Ukraine, many countries have taken steps to curtail Moscow’s revenues and hinder its war effort. One critical aspect of this economic pressure has been the restriction of oil and gas imports. Europe, a major importer of Russian energy, has played a significant role in this effort.

 

Gazprom, Russia’s state energy giant, is facing “enormous difficulties” in selling its vast reserves of natural gas. New analysis from the Atlantic Council think tank reveals that Gazprom is struggling to break into new markets.


In 2022, Gazprom restricted its gas supplies into Europe, aiming to starve Kyiv’s allies ahead of the winter. However, Western nations swiftly adapted, reducing their dependence on Russian gas and becoming more self-sufficient.

 

Gazprom’s revenue plummeted by 41 percent year-over-year in the first half of 2023. Sales profits dropped by 71 percent, and gas production declined by 25 percent. The Gazprom Group, which includes oil and power businesses, reported a net loss of $6.9 billion for the previous year.

 

The European Union took decisive action, announcing a plan to cut gas imports from Russia by two-thirds within a year. The UK, which previously imported small quantities of Russian gas, has now ceased these imports altogether. Western allies agreed on an oil price cap, preventing Russia from receiving more than $60 per barrel of crude oil. This cap has impacted the price of Russian oil, making it less attractive in global markets.

 

Russia’s isolation has intensified. A new pipeline linking Russia with close ally China is estimated to cost around $100 billion, a sum Russia cannot afford. However, China is not expected to need additional gas supplies until after 2040, leaving Russia in limbo.

 

Berlin-based energy analysts have pointed out that Putin’s tactic of using Russian gas as leverage against Europe has backfired. The intention was to shock Europe and force them into submission, but to Putin’s surprise, this did not happen. Europe’s resilience and adaptability have thwarted his plans. Despite having abundant gas reserves, Putin finds himself unable to sell them effectively. Europe’s ability to diversify its energy sources has undermined Russia’s leverage.

 

As things stand, Gazprom’s woes and Europe’s strategic responses have exposed the flaws in Putin’s energy war. Russia’s gas reserves remain untapped, leaving Putin with a surplus he cannot monetize effectively. As Europe continues to seek alternative energy solutions, Russia’s hold over the continent weakens, and its ability to continue the war in Ukraine faces significant challenges.

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