Russia is the source of 40% of Europe's imported gas. This implies that Russia is Europe's sole source of energy. While Germany has recently paused the clearance process for the Nord Stream 2 gas pipeline in reaction to the atrocities in Ukraine, the 55 billion cubic meters of Russian gas that is expected to run through the pipes each year has also been shut off.
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Let's navigate the financial ramifications of this.
Energy dependence on Moscow
Gas is an energy source that Europe cannot do without if it wishes to progress with its climate objectives. It is on this dependence that Vladimir Putin intends to rely on in the event of excessively strong sanctions against his country.
While the gas price is very high, it is, therefore, to be expected that it will increase further until a solution is found.
Carole Mathieu, head of European policies at the Energy & Climate Center of the French Institute of International Relations, explains:
It's an important strategic lever. The price of gas is already very high, with serious consequences on purchasing power, obviously Russia will play on it to try to limit economic sanctions.
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Russia also dependent on the export of its gas
However, Europe isn't the only one dependent on gas exports, indeed Russia also depends on the export of its gases. It even represents 15% of its GDP.
Carole Mathieu adds:
It would be very dangerous and counterproductive for Russia to limit gas to Europe too much, or even to cut off the supply altogether. It would also damage its image as a trusted producer, even among non-Europeans. But with Vladimir Putin, you should never swear to anything.
Apart from Russia, Europe imports gas from Norway (18%) and Algeria (12%).
