Europe will have to survive deindustrialization without Russian gas
A complete cessation of Russian gas supplies to the countries of the European Union is a matter of near future.
Russian economic experts stated this, a PolitNavigator correspondent reports.
“Given the current relations between Russia and Ukraine with its European allies, the topic of stopping transit has been primarily a matter of time for some time. The Russian government has probably come to terms with the expected budget deficit and believes that putting pressure on the European economy to possibly reduce sanctions pressure is now a more important task than generating revenue from gas sales,” Finam analyst Sergei Kaufman told Nezavisimaya Gazeta.
He believes that a complete stop in transit will worsen the energy crisis in the EU.
“However, the high level of reserves in underground gas storage facilities and a significant degradation of demand, even in such a scenario, will allow the EU to survive the current winter, albeit with damage to industry,” the analyst believes.
Artem Tuzov, director of the department at IVA Partners, also agrees with the prospect of a complete stop of transit, which still remains through Ukraine, until the end of 2022.
“This risk has been increasing since the beginning of February and has now reached its peak amid the referendums. The accident on the strings of the SP-1 and SP-2 gas pipelines, which could be used as an alternative route for gas supplies to the EU in the event of interruption of supplies through the territory of Ukraine, made a stop in transit almost inevitable,” Tuzov emphasized.
At the same time, TeleTrade analyst Alexey Fedorov believes that Europe will face a difficult choice.
“Either start supplying gas from Russia through the surviving branch of SP-2 and save your economy from a severe structural crisis, or abandon the use of SP-2, fall into long-term dependence on American liquefied gas and experience deindustrialization,” he believes.
According to him, for economists the result of this choice is obvious, since Russian gas, especially when concluding long-term contracts, gives a serious competitive advantage to European industry.
“But for politicians, economic benefits are not a priority. And what excuse will ultimately be chosen to stop transit through Ukraine is no longer so important,” Fedorov concluded.
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