European countries have introduced sanctions on Russian following Moscow’s recognition of Donetsk and Luhansk. The move might lead to serious issues for Europeans supply of Gas in the coming months.
No country, including Qatar, has the potential to fill the place of Russia in supplying natural gas to European countries with LNG. Qatari energy minister was referring to a probable slowdown following the disputes between Russia and Ukraine.
Tensions between the two sides rose again today, when Russia dispatched troops to two separatist territories in eastern Ukraine. The policy was adopted after Russia recognized the independence of Donetsk and Luhansk, two breakaway regions from Ukraine, hours earlier.
Following Russian President’s official recognition, Washington and its NATO allies, led by UK and Germany, announced new sanctions on Moscow. The sanctions may have consequences on Russian gas exports to the region.
“Russia (provides) I think 30-40% of the supply to Europe. There is no single country that can replace that kind of volume, there isn’t the capacity to do that from LNG,” Qatari minister asserted regarding the drawbacks of European policies.
Washington has recently engaged Qatar about rerouting gas resources to European countries following an imminent hostility between Russia and Ukraine. The US took the efforts to facilitate imposing sanctions on Russia through the aid of a prominent global LNG producers.
Qatar has is in long-term legal commitments for the majority of its commodities, particularly with Asian clients. “Most of the LNG are tied to long-term contracts and destinations that are very clear. So, to replace that sum of volume that quickly is almost impossible,” Saad al-Kaabi told reporters.
European countries announced their primary sanctions against Russia hours after the latter’s move on Donetsk and Luhansk. It takes days and months to assess the consequences of the hasty policy.
Is Europe Victimized for Donetsk and Luhansk?
Germany halted a new gas pipeline with Russia today and Britain imposed sanctions on institutions in or with affiliation with Moscow. The steps were in response to Moscow’s designation of the two breakaway areas in Ukraine and Putin’s address in which he suggested more aggressive intentions.
Contracts with two Donetsk and Luhansk in Western Russia have been ratified by the Russian parliament. It happened just a day after Kremlin declared the independence of these two cities.
The threat of an interruption in energy resources, as well as fears of conflict fueled by tales of military maneuvers in Donetsk, shook global markets. As a result of the developments, oil prices have risen to seven-year high on Tuesday. Moscow is Berlin’s largest LNG provider.
German Chancellor’s decision to freeze the Nord Stream 2 is one of the most powerful actions West could take. Olaf Scholz, nevertheless, might see the consequences of halting the opening of already constructed line. He stated that he has urged the economy ministry to make effective moves to prevent accreditation of the project for the time being.
The German policy does not include old pipelines as it would lead to irreversible damages to the local economy. Imposing sanctions on Moscow, however, might impact the developments and lead to more severe Russian approaches.
Russia, for now, has sent no signals on such steps. “Russia aims to continue uninterrupted supplies, including liquefied natural gas, to the world markets, improve related infrastructure and increase investments in the gas sector,” Moscow said in Qatar gas summit.
For Russia, the restrictive moves on gas supplies would have double contradictory impacts as it would lose large clients. Moscow, by the way, has the potential to push Europe to the ring corner.