The President of the Russian Federation, Vladimir Putin on Wednesday warned the Western (NATO Powers) stating that Russia shall cut off its gas supply if it tries to place price caps and sanctions on Russian oil and gas exports. He further added that the West will be “frozen like a wolf’s tail”. Speaking at an economic forum in the Eastern Russian city of Vladivostok, Putin stated that European calls for a price cap on Russian Gas were “stupid” and lead to higher global prices and economic problems in the European Continent.
The G-7 Countries (France, Canada, Germany, Italy, UK, USA, Japan and European Union (EU) announced their plan of imposing a price cap on Russian Oil Exports the previous week in a move to disable Russia’s ability to secure tankers from other countries other than the G-7. In a befitting reply, President Putin stated that Russia will stop the supply of “anything”. Anything here refers to major energy resources such as gas, coal and heating oil.
Russia is the second largest exporter of oil and natural gas after Saudi Arabia. Europe imports 40% of its gas and 30% of oil from the Russian Federation. The primary pipeline that flows and provides gas to all of Europe is the “Nord Stream-I”. The Russian gas company called “Gazprom” said that the Nord pipeline will remain closed due to the engine oil leak from one of the turbines. Putin added that Germany and Ukraine are solely responsible for themselves as they had shifted their choice of gas pipelines. The largest Russian Oil Company is “Rosneft” followed by Lukoil and Gazprom. Russia has the 6th largest oil reserves in the world, most of them in the Russian Far East (Siberia).
The Nord Stream-1 pipeline stretches for 1200km under the Baltic Sea, near Saint Petersburg to northeast Germany. It opened in 2011 and sends a maximum of 170 cubic meters of Gas per day from Russia to Germany. Europe and Germany in particular are highly dependent and reliant on Russian Gas to meet their energy requirements. According to the CEO of Crystol Energy Carol Nakhle, the “market situation is so tight that any disruption in the supply causes more hikes in the price of gas”.
Germany has decided to look for alternatives such as gas supply from Netherlands and Norway. The German government has decided to reduce gas usage (2%) by limiting the use of lighting and heating in public buildings. The same steps have been taken by Switzerland and Spain. People are using solar panels and wood stoves in place of gas.
The United States of America and its allies embarked on launching an economic war against Russia when it declared a war on Ukraine on 24th of February, 2022. The Russians have cut off/shut down most of its three big westward pipelines towards the east. The European Union in Retaliation has pledged not to depend on Russian natural gas.
Cutting supplies from The Russian Federation will roil global energy markets leaving the world economy facing even higher prices. According to Western European nations and America, Russia is using its energy resources as leverage and a “political weapon”
Russia has been hit by very severe economic sanctions and embargoes due to which many international energy companies (upstream and downstream) are reluctant to participate. This has affected the output of Indian Companies such as ONGC, OVL, and ESSAR which have facilities in the Caspian Sea.