Russia fulfilled its threat and cut off gas from two EU countries already – how dependent is Europe on Russian natural gas?

Russia carried out its threat for the first time on Wednesday and closed the gas tap to two EU countries: Poland and Bulgaria.

According to the Russian state gas giant Gazprom, the supply of natural gas to the Polish gas company PGNiG and the Bulgarian Bulgargaz was suspended because they did not pay for their supplies in rubles.

President of the European Commission Ursula von der Leyen comments on Gazprom ‘s announcement of Russia’ s attempt to tighten gas on the EU once again.

We compiled the answers to six key questions.

The background is probably Poland’s own list of sanctions on Russia published on Tuesday, which also includes Gazprom and the country’s decisions to secede from Russian energy.

Assistant Professor of Russian Environmental Policy Brother-Pekka Tynkkysen it is no wonder that Poland is the target.

– If we look at Russia’s internal rhetoric and propaganda, Poland is the second worst enemy after Ukraine, Tynkkynen says.

Acting as a senior advisor at the Bank of Finland Laura Solanko adds that Poland announced even before the war that it had no intention of renewing its agreement with Gazprom, which expires at the end of this year.

Poland also announced on Tuesday a list of its own sanctions and the list includes Gazprom, which could irritate the gas giant.

Russia is trying to harm Europe by confusing the market, but it does not want to cut everything off.

Professor Tynkkynen estimates that Russia is trying to find some balance in suspending deliveries. Russia, on the other hand, is dependent on EU oil and gas purchases.

– Russia does not want to stop everything immediately, because its own war is suffering, says Tynkkynen.

Tynkkynen estimates that at the same time, Russia is certainly trying to damage Europe with such partial energy supply disruptions, as it will cause panic in the market and raise prices.

– If Russia stops exporting even to Poland, Russia will export less and this will allow Russia to receive the same amount of money from other buyers. So this is a game like this, the professor sums up.

It is not necessarily about the ruble exchange rate, but about prestige.

According to Laura Solango, the Bank of Finland, this is also a kind of riddle for economists.

– It is not needed to support the ruble exchange rate, because the ruble exchange rate is currently at the same level as before the attack, Solanko states.

The ruble depreciated after the attack began, but Solango said it has risen as Russia has forced export companies to repatriate its income into the ruble. At the same time, the opportunities for Russians to export and buy currency are limited, and the ruble is no longer freely convertible.

According to Professor Tynkkynen, there is also a question of prestige behind the Russian ruble claim.

“I think Putin wants to show Europe that Russia can dictate trade rules when Russia is such a major energy supplier,” says Tynkkynen.

The European Commission has advised energy companies to stick to the euro or the dollar.

According to Tynkkynen’s assessment, the EU and EU countries do not want to artificially support the ruble in this situation.

“Europe is trying to get Russia to its knees with sanctions so that the murderous war can end,” says Tynkkynen.

European Commission President von der Leyen said on Wednesday that energy companies should not bow to Russia’s demands but continue to pay for their orders in the currency recorded in the contracts. In practice, this currency is the euro or the dollar in almost all contracts.

The ruble as a currency is also not at its most attractive right now.

According to the Bank of Finland’s Laura Solango, the reluctance of companies is already affected by the fact that Russia has restricted the free exchange of the ruble, which is why the currency does not currently have a genuine market exchange rate and is not quoted by the European Central Bank.

Dependence varies greatly between EU countries.

According to Professor Tynkkynen, there are really big differences between EU countries in terms of gas dependence. In Germany, virtually half of the gas used has been Russian before the war of aggression.

Hungary and Italy, for example, are problematic for the professor because they play a major role as an energy source and much of it comes from Russia.

In Finland, the situation is much easier, as the role of natural gas as an energy source is small. At EU level, however, natural gas is becoming a major source of energy not only for industry but also for electricity generation and home heating.

In the graph below, the EU countries’ dependence on Russian gas has been calculated on the basis of two statistics: 1) how important gas is for the country’s total energy and 2) how much of the country’s natural gas is Russian that year.

According to Laura Solango, the Bank of Finland, the role of natural gas in household energy consumption in general is politically sensitive.

– There are startling differences. In Finland, the share of gas in household heating is practically zero, but in Slovakia, Italy and Germany, for example, almost half of household heating energy is gas, Solanko states.

The Netherlands, on the other hand, is an example of a country where homes are mainly heated by gas, but gas does not come from Russia.

The EU and individual countries are feverishly considering options, but easy solutions are not cheap.

According to Tynkkynen, “stress tests” have been conducted in various countries in recent years, with the idea of ​​preparing for such shocks at the level of an individual member state.

The Prime Minister of Bulgaria, who was hit by a gas suspension today Kiril Petkov According to the news agency AFP, the country is prepared for the situation and has made a plan to resume deliveries from alternative sources.

The Prime Minister of Poland Mateusz Morawieckin according to the country, its gas reserves are 76% full and Poland is preparing to source gas “from everywhere” other than Russia.

In the EU, the focus is on liquefied natural gas (LNG) in particular. The United States has already promised to increase its LNG supplies to the Union this year, and individual countries are making their decisions.

For example, Finland and Estonia are leasing a joint LNG terminal to import liquefied natural gas from other parts of the world as a substitute for Russian natural gas.

According to Tynkkynen, the problem now is that everyone is in a great hurry to find alternatives, which also raises prices.

“In a way, the problem is that we are now in an energy crisis that affects the whole of Europe and everyone is trying to get energy out of elsewhere and build renewable energy capacity to be able to replace Russian energy,” says Tynkkynen.