Europe's Energy Crisis Exposes Dependence on Vladimir Putin's Gas—For Now

Russia could benefit politically as demand for its natural gas increases amid an energy crisis that has European Union states scrambling for solutions.

The crisis is being driven by high global demand for gas and oil, which has forced up prices as economies reopen after COVID-19 lockdowns. It has been exacerbated in Europe by a reduction in output from the wind power sector.

Russia is already Europe's largest supplier of natural gas and President Vladimir Putin has said his country is "ready" to supply more of the fossil fuel if EU member states require it.

Gas prices fell on Thursday after Putin directed Russian oil and gas giant Gazprom to begin putting gas into the company's storage facilities in Germany and Austria.

"This will make it possible to fulfill our contractual commitments in a reliable, stable and consistent manner and to supply our European partners with gas in the autumn and winter," Putin said.

"This will create a favorable situation—at any rate, a better situation—in the European energy market in general."

Putin said on October 13 that more gas could be supplied.

"If they ask us to increase further, we are ready to increase further. We will increase by as much as our partners ask us. There is no refusal, none," the Russian president told a conference in Moscow.

Amos Hochstein, senior advisor for energy security at the U.S. State Department, warned on Monday that the Kremlin could use gas as a political weapon.

"I think we are getting close to that line if Russia indeed has the gas to supply and it chooses not to, and it will only do so if Europe accedes to other demands that are completely unrelated," Hochstein said.

Energy and international policy experts who spoke to Newsweek said the crisis offered opportunities for Russia at the moment, but Europe could make the move away from dependence on natural gas in future—a fact Moscow seems to understand.

'Leverage for Economic and Political Gains'

Ralph Schoellhammer, an assistant professor of international relations at Webster Vienna Private University in Austria, told Newsweek that Russia's control of reliable energy sources gave it "geopolitical advantages."

"It is no coincidence that President Putin has become more combative in his rhetoric regarding NATO and his decision not to participate in either the COP26 or the earlier G20 summit," Schoellhammer said.

"In a way similar to the reaction of OPEC in 1973, where oil-exporting countries imposed an embargo on the West for their support of Israel in the Yom Kippur War, Russia sees its gas supplies as leverage for economic and political gains."

Schoellhammer said it was a "mystery" that European decision makers didn't see the situation coming.

"I believe one answer is the almost 'postmodern' approach the EU has to foreign policy, leaving them dumbfounded every time they encounter straightforward power politics— regardless if it is by China, the U.S. or Russia," he said.

Mats Engström, a visiting fellow at the European Council on Foreign Relations and former senior official at the Swedish Ministry for the Environment, believes Russia "feels its position has strengthened when EU countries are now competing with East Asia for Siberian gas."

Engström told Newsweek: "Although the European Commission is looking into possible Gazprom breaches of competition rules, internal divisions between member states play in favor of the Kremlin.

"Putin will try to use his recent signal to Gazprom to increase exports to the EU as 'goodwill' in extracting concessions on other issues. For example, Russia is asking for softer sanctions in order to facilitate investments in green technologies."

Russia's Supply Capabilities

Demand for Russian gas could yet increase, according to Philip Walsh, professor of entrepreneurship and strategy at Ryerson University in Toronto and principal investigator at the university's Center for Urban Energy. He is also co-author of Corporate Responsibility and Sustainable Development.

"As holder of the world's largest reserves of natural gas, Russia is not only a significant supplier of natural gas to Europe currently, it also has the potential to supply even larger volumes," Walsh told Newsweek.

The price of Russian gas in Europe is negotiated and highly dependent on the supply-and-demand relationship, he explained.

"With Russia's supply capabilities, and limited large-volume natural gas options for Europeans, negotiating power remains with Russia when it comes to price, especially if European demand were to spike."

The geopolitics complicated security of supply, he added.

"Aside from the Nord Stream 1 pipeline, most of the natural gas pipelines connecting Russia with Europe physically run through non-European countries and are therefore controlled by those countries," Walsh said.

"The ability for the Russians or the Europeans to ensure security of supply therefore relies on their relationships with countries such as Belarus and the Ukraine, both of whom rely on supply from those same pipelines and are less willing to be forced into paying higher prices for their natural gas."

Phasing Out Fossil Fuels

Russia is in a strong position now, but European nations may soon wean themselves off gas and other fossil fuels—and Moscow appears to understand this.

Engström said: "In a longer perspective, the EU remains committed to the phase out of fossil fuels. And there is a growing recognition in Russia that eventually gas exports need to be substituted with income from other sources.

"The interest in producing and exporting hydrogen is a sign of this."

He added that Russia wants to avoid over-dependence on China and the country needs industrial cooperation with European companies for its future competitiveness.

"In that perspective, the EU position is stronger towards Russia than it might seem looking only at the present energy situation," Engström told Newsweek.

He added that the crisis had reinforced the beliefs of those within the EU who are cautious about the 2030 goal of a 55 percent reduction in emissions, but most member states still supported the target.

"The outcome of present negotiations over the legislative measures will depend both on how energy prices evolve during the winter, and on how EU policymakers can bridge the gap between western and eastern member states over climate and economy," he said.

Schoellhammer pointed outthat the move away from gas could be facilitated by embracing nuclear energy.

"It seems reasonable to suspect that especially Eastern European nations, but also France and Great Britain, will evolve towards a pro-nuclear standpoint—a process that is partially already underway but unfortunately will take time to lead to actual energy production," he said.

In the meantime, it looks as though Europe will continue to rely on imports of Russian gas as winter approaches.

Vladimir Putin Attends a Meeting
President Vladimir Putin at a meeting in Sochi on October 21. Putin will not attend the COP26 global environmental summit that begins this weekend in Glasgow. Mikhail Svetlov/Getty Images