Russia's threat to cut off gas is next to meaningless... Russia’s so-called ‘gas weapon’ is nothing but a myth On April 26, Russia stopped delivering gas to Bulgaria and Poland. Several weeks later, both countries are doing just fine. https://www.aljazeera.com/opinions/2022/5/10/russias-so-called-gas-weapon-is-nothing-but-a Much has been said and written about Russia’s proverbial “gas weapon”. The argument goes that high dependence on Russian natural gas makes nations in East and Southeast Europe think twice before they consider making any move against Moscow. The Kremlin is in a position to punish those daring to oppose it by introducing harsh clauses to gas deals or, worse still, cutting off deliveries. Friends, on the other hand, get rewarded. Case in point: the “incredible” deal Russian President Vladimir Putin gave Serbia, which many believe ensured Serbian President Aleksandar Vucic’s re-election. However, we have seen recently that this so-called “gas weapon” does not really exist. On April 26, Gazprom turned off the tap for Bulgaria and Poland after they refused to comply with a unilateral change of their supply contract dictated by Putin and to pay for their monthly uptake in roubles. Several weeks later, both countries are doing just fine. The Russian decision has not unleashed pandemonium in either economy. It has not triggered a domestic political crisis, much less led to a major shift in Polish or Bulgarian foreign policy. If anything, the cutoff has strengthened those countries’ resolve. Even Bulgaria, the most dovish amongst doves when it comes to Russia, has shown some courage. On April 28, hours after gas stopped flowing, Prime Minister Kiril Petkov travelled to Kyiv to discuss with Ukrainian President Volodymyr Zelenskyy what Sofia can do to help. Though Bulgaria is formally not sending military assistance to Ukraine, it is a public secret that munitions and arms from its defence manufacturers are being transferred via third parties, notably Poland. Bulgaria’s response to the disruption of the gas flows from Russia merits special attention. In contrast to Poland, which currently takes less than half of its gas from the Russian Federation, the Balkan country is reliant on Russia’s Gazprom for over 90 percent of its supplies. But unlike previous cutoffs in 2006 and 2009, this time around the government in Sofia clearly had a plan. For instance, the state-owned trader Bulgargaz has contracted shipments of liquefied natural gas (LNG) that are now entering Bulgaria through the Revithoussa terminal in Greece. Additional volumes are also arriving from Romania, through the Trans-Balkan Pipeline which, until TurkStream started work in 2020-21, served Gazprom. The fact that the disruption happened in summer, after the end of the heating season, is making the Bulgarian authorities’ life easier, too. The main thing, however, is that Bulgaria’s long-delayed interconnector pipeline with Greece (ICGB) is due to come online on June 30 or soon thereafter. Once it is up and running, Bulgaria will be importing one billion cubic meters (bcm) – corresponding to about one-third of its annual demand – from Azerbaijan, as ICGB connects to the so-called Trans Adriatic Pipeline. LNG will be coming from the terminals in Turkey and, after the end of 2023, from a floating storage and regasification unit (FSRU) next to the northeastern Greek port city of Alexandroupolis. On May 3, Prime Minister Petkov witnessed the launch of works on the FSRU in the company of Greek Prime Minister Kyriakos Mitsotakis and EU Council President Charles Michel. Also present were Aleksandar Vucic and Dimitar Kovacevski, North Macedonia’s prime minister. The war in Ukraine has given tailwinds to new infrastructure projects that will diversify gas deliveries to the Balkans and redraw the supply routes. Yet, in the short term, it is business as usual. Despite being shunned by Gazprom, Bulgaria is not stopping flows from Russia to Serbia and Hungary through TurkStream. Sofia generates income from the Russian shipments passing through, doesn’t want to spoil relations with Budapest and Belgrade, and also wants to appear to be acting in good faith on its contractual obligations vis-à-vis Moscow in light of the looming arbitration case. Contrary to popular belief, Southeast Europe does not depend on Russian gas. The main reason is that local countries consume limited volumes: three bcm per year for Bulgaria and Serbia each and six bcm for Greece. Romania, a large market where annual demand stands at 12 bcm, meanwhile, barely takes any Russian gas at all. With the right infrastructural links, Gazprom can be replaced by alternative suppliers. That is why Greece and North Macedonia are mulling an interconnector pipeline that could also be extended to Kosovo. The same for Bulgaria and Serbia. There are long-standing plans for an offshoot of TAP into the Western Balkans: the Ionian-Adriatic Pipeline that could serve Albania, Montenegro and Bosnia. More immediately, gas itself can be replaced by electricity, particularly if prices shift in favour of the latter. Thanks to large spare capacity, Bulgaria and Romania both export electricity to the likes of Greece and Turkey, where demand often outpaces supply. Last but not the least, there is the green transition. Investment into renewable energy and energy efficiency – a priority on which the European Union is as keen as ever – will shape the future of Southeast Europe. The question, really, is about the price. These days, Russian pipeline gas based on long-term contracts and indexed to oil is cheaper than what spot markets – reflecting supply and demand – charge. Diversification away from Russia has a price tag. However, tomorrow the balance may change. A slowdown in global economic growth and depressed demand for energy will make gas cheaper, too. Then Balkan countries will be in a much better position in negotiating with Gazprom, should the Russians want to shore up their market share. The main crunch has to do with politics. So long as there are politicians and businesses in Southeast Europe benefiting from the current setup and happy to put diversification of supplies and modernisation of the energy sector on the backburner, Russia will have a card to play. It can buy all the support it needs and build mammoth projects such as TurkStream with ease. That is why the current crisis is also an opportunity to shake things up. What happens in Bulgaria may set an example for others in the region.
"Most of the [European] gas importers have already opened their accounts in roubles with Gazprom,” admitted Mario Draghi, PM of Italy, to reporters during his visit to Washington DC today. https://www.reuters.com/business/en...uption-over-russian-rouble-demand-2022-05-11/
Russia privately admits its economy is facing biggest collapse in three decades as a result of Western sanctions in leaked Kremlin forecast Russian Finance Ministry is predicting a 12 per cent collapse in GDP in 2022 The leaked forecast will put pressure on Vladimir Putin, who is facing criticism Russia's export-dependent country is plunging into recession amid sanctions https://www.dailymail.co.uk/news/ar...gest-collapse-30-years-Western-sanctions.html Russia has privately admitted the country is facing the biggest economic collapse in three decades as a result of crippling Western sanctions, a leaked copy of the Kremlin's forecast shows. The Russian Finance Ministry is predicting a 12 per cent collapse in gross domestic product (GDP) this year, the deepest economic contraction since 1994 when Russia was lurching towards capitalism under President Boris Yeltsin. The leaked forecast will put pressure on Vladimir Putin, who is facing criticism from Kremlin officials who warn of the damaging political and economic cost of his war plan. Russia's export-dependent economy is now plunging into recession after the Russian strongman invaded Ukraine as the move triggered sweeping Western sanctions, including a partial freeze of its reserves. According to leaked documents from the finance ministry, seen by Bloomberg, their figure of a 12 per cent contraction is more pessimistic than the Economy Ministry's prediction of a 8 per cent decline this year. The Russian Finance Ministry is predicting a 12 per cent collapse in gross domestic product (GDP) in 2022, the deepest economic contraction since 1994 when Russia was lurching towards capitalism under president Boris Yeltsin The Kremlin has not released a public forecast since Russia invaded Ukraine and the Finance Ministry claimed the forecast was inaccurate. 'Preparation of official macroeconomic forecasts does not fall under the Finance Ministry's authority,' the ministry said in a statement, adding that it 'expects that the measures taken by the government and the Bank of Russia will make it possible to ease to a large extent the negative consequences of sanctions and ensure stable economic development'. At the weekend, the G7, including the US and UK, released a set of sweeping new sanctions that target Russian media and bank executives. During that meeting, G7 leaders agreed to follow the U.S. example and commit to phasing out or banning the import of Russian oil. The move will massively damage Putin's ability to fund his war as energy is a main source of state revenue for Russia. 'The main negatives are the oil embargo, the EU is giving up Russian gas, along with more departures from foreign companies,' Natalie Lavrova, chief economist at BCS Financial Group in Moscow, told Bloomberg. 'All that will probably expand gradually, with a lot of negative carrying over in on 2023.' Lavrova predicts that Russia's economy will face a contraction of 10.8 per cent this year and about 5 per cent in 2023 based on current sanctions. The leaked forecast will put pressure on Vladimir Putin, who is facing criticism by Kremlin officials who warn of the damaging political and economic cost of his war plan The Bank of Russia said on April 29 that it expects a contraction between 8 per cent and 10 per cent this year. Last week, European Commission President Ursula von der Leyen called on the EU to ban oil imports from Russia. Von der Leyen proposed having EU member nations phase out imports of crude oil within six months and refined products by the end of the year. 'We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimizes the impact on global markets,' von der Leyen said. The proposals must be unanimously approved to take effect and are likely to be the subject of fierce debate. Von der Leyen conceded that getting all 27 member countries — some of them landlocked and highly dependent on Russia for energy supplies — to agree on oil sanctions 'will not be easy.' The UK and Britain have already vowed to stop using Russian oil in response to the invasion of Ukraine. The EU gets about 25 per cent of its oil from Russia, most of which goes toward gasoline and diesel for vehicles. Russia supplies about 14 per cent of diesel, S&P Global analysts said, and a cutoff could send already high prices for truck and tractor fuel soaring. If approved, the ban on oil imports would be the second package of EU sanctions targeting Russia’s lucrative energy industry since the country invaded Ukraine. (Article has additional pictures and video.)
In the same article: Supplies were down 1 million barrels a day last month, and these losses could triple in the second half of the year, the agency estimates. EU sanctions against Russian state-linked enterprises such as production giant Rosneft PJSC will take effect on May 15, and the bloc is moving towards a full ban on the country’s supplies. Russia is also selling at a 20-30 USD discount. So this +50% will quickly disappear. The only thing that matters is GDP. For Russia it is around 1.84 billion $. For the US it is 21 billion $. So 11 times more. The Russian GDP is mostly oil and gas. Russia is an economical dwarf. Only 75% of the Italian GDP, and only 50% of Germany's GDP.
Then there is the reality... Russia’s Economy Facing Worst Contraction Since 1994 GDP may shrink 12% on sanctions, internal forecast shows Finance Ministry sees worse contraction than Economy Ministry https://www.bloomberg.com/news/arti...s-economy-facing-worst-contraction-since-1994
The collective west is going to find out what's important:raw materials and food or services economy. This is going to be reality check Incoming