Russian Nat Gas Game Theory

Tyler Durden's picture

The question many are asking this morning is what is the iron-first of Putin thinking? With his "military exercise" over, does he believe it enough to have shown the world his potential for disruption? We suspect another reason may have been weighing on his mind. As we noted previously, Europe accounts for around a third of Gazprom's total gas sales, and around half of Russia's total budget revenue comes from oil and gas... and whatever Putin's geo-political ambitions, we suspect he did not want to jeopardize that source of revenue - no matter how much sabre-rattling and Gazprom-fear-mongering. As the following chart shows, Europe should be sighing a huge relief this morning - but remain cognizant that this, we suspect, is far from over.

And here's some helpful advice from the EU...

So - follow the money... US to IMF; IMF to Ukraine; Ukraine to Russia; Russia buys US Treasuries again?

Or the EU looks at this chart...

Source: @ReutersGMF

and that's why this happens...

Remember, as we noted in detail here - Russia receives around $100 million per day from Europe for Natural Gas

And these are the nations (via Morgan Stanley) who are the most dependent on that flow of natural gas...


But while we noted the dependencies last night, it is worth noting that thanks to a warmer than expected winter in Europe, EU states have significant gas stocks...


The game is only just beginning...just as explained in great detail here.

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ACP's picture

But unlike Duke Leto, the EU doesn't give a shit about The Ukrainian workers.

y3maxx's picture

...Russia may have Natural Gas and boots on the ground in the Crimea, but the USSA still has the NSA, which hears and knows everything, everywhere.

ParkAveFlasher's picture

Yes, and not a brain cell to analyze the data for the good of the nation. 

BellyBrain's picture

Just imagine...had Tesla been able to bring his "free" energy technology to the world, none of this shit would be necessary or even possible.

SWRichmond's picture

Putin doesn't want to lose customers...but there ARE folks who want to GAIN customers, and it is in their interests to make customers question Russia as a supplier.

But then, Putin didn't start this, did he?

Cui bono?

Flakmeister's picture

This is merely the latest chapter in a game that has been going on for a long long time...

All Putin had to do was make sure the Ukraine was reasonably run, he couldn't see to it...

Herd Redirection Committee's picture

A King (or Khan) has to reward loyal followers with spoils, the proverbial piece of newly conquered pie.  Grant a few domains to a Duke, here and there.  So Putin has let his lackeys like Yanukovich run the place, and that they will loot as much as possible just comes with the turf.  

Its old school.  In the West, we have the revolving door between government and industry instead of bribes.

Flakmeister's picture


But it still has to be reasonably run, and it wasn't....

eurogold's picture

No Putin didn't start this. It is the overblown aspirations of the extotionist state "Ukraine" (only because of the pipelines running through it ) which make this situation interesting. Provoking Russia will bring consequences as Russsia is now implimenting. Way overdue !

Ident 7777 economy's picture

Is it really BellyBrain or actually 'Jellybrain'? Or more likely marsh-mellow or perhaps snit-for-brains?

BellyBrain's picture

Find a short sword and introduce your belly to seppuku, troll.

LawsofPhysics's picture

Just for the sake of argument, what if the Chinese were already on board all along?  Would they be so eager to sacrifice the U.S.S.A. and all their investments along with it or could they simply move into California like the Russians did in Ukraine?


headhunt's picture

The west coast liberals would stop them in their tracks when they sued each and every soldier for environmental damage.

Not Too Important's picture

The Chinese are well aware the US is radioactive, and getting worse daily. They are buying US property with US dollars/Monopoly money, and will squeeze every political lever they can. But in the end, it means nothing to them.

The first question is to always ask, can they do without X? Can Russia or China do without the US? Yes. Can Europe do without the US? They're getting there. Can the US do without Europe? Don't know. Can the US do without Russia and/or China? Probably not.

But if I had a shitload of gold, a partner with unlimited energy resources, we both had adequate nuclear capabilities, and the ability to create massive hyperinflation in the neighborhood across town to get them off my ass, well . . .

aVileRat's picture

Good article.

Stock market will prob. play out like gulf war S&P overlay: 1. a fear phase, one rally phase, 1 reset phase, then a rip on the spending as everything goes back to normal.

Makes for a good overlay going into the october elections in which otherwise is a very dull flat technical trading band.

Anywhoo, if one were to drop sanctions on Russia then going into the spring breakup is when the sanction round would be most effective due to the large draw on FX hard currency reserves to pay for both petrochemicals to drill and for chemical manufacturing (urea, sulfates) + transport (refinery catalysts).


Anusocracy's picture

I'm missing the point on "good of the nation" being done by a government entity.

sushi's picture

NSA knew exactly who in the Ukraine was having phone sex. Too bad they didn't notice the Spetznatz.

BuddyEffed's picture

The spice must flow.   And shit flows downs hill.  So don't piss down my back and tell me it's raining.

Taint Boil's picture



Dune – the best sci-fi series ever created. Always get a chuckle when I see numerous Dune references here. 

Jumbotron's picture

"Russians don't take a dump, son, without a plan."



TruthInSunshine's picture

Vlad says: "Triple nat gas prices, bitchez. Fire off an ICBM while Horseface is still here to demonstrate pricing power, too."

Flakmeister's picture

Vlad is starting to channel the Kim Jong clan....

TruthInSunshine's picture

Flak, I know that geopolitics has you flustered, but unlike North Korea, Vlad's MANY ICBMs fly all over the world and work.

Flakmeister's picture

Absolutely true re: Vlads nuclear arsenal...

But to what end? What do you think would happen if he actually launched in anger? Is that a chess player? Or a lunatic?

As far geopolitics goes, the typical ZH poster is in Grade 7 social studies and it shows...I have a shelf in my library devoted to 20th century geopolitics and that doesn't even count WWI and WWII...

An ICBM test at a moment like this is mainly for domestic consumption, a empty show of power... Putin has demonstrated that he is all hat and no cattle and that they are incapable of projecting force, this is not 1956 or 1968...

Ident 7777 economy's picture

... "shoring up his base" so they will turn out and FIGHT ... unlike the likely repub voters in 2012 who stayed home and sulked ...

Flakmeister's picture


For shits and giggles could you reconcile your statement with this:

Mr. Romney beat Mr. McCain’s numbers in every single battleground, save Ohio. In some cases, his improvement was significant. In Virginia, 65,000 more votes than in 2008. In Florida, 117,000 more votes. In Colorado, 52,000. In Wisconsin, 146,000. Moreover, in key states like Florida, North Carolina, Colorado and Virginia, Mr. Romney turned out even more voters than George W. Bush did in his successful re-election in 2004.

By contrast, Mr. Obama’s turnout was down from 2008 in nearly every battleground. He lost 54,000 votes in Virginia, 46,000 votes in Florida, 50,000 votes in Colorado, 63,000 votes in Wisconsin. Ditto Iowa, Nevada, New Hampshire, Ohio. The only state where Mr. Obama increased his votes (by 36,000) was North Carolina, and he was still beaten by a Romney campaign that raised its own turnout by a whopping 147,000.

From and the WSJ


Again, there's that nasty Flakmeister with the facts which he uses to piss on everyones parade...

Taint Boil's picture



Whoa, whoa there fella …. No facts here just Obama phones [urban myth], Muslims, Nazis, on and on ad nauseam.



Ident 7777 economy's picture

Dumbo, I'm not talking about some repub shoring up his base in this context, but rather Putin shoring up HIS 'base' ... Putin may have to actually fire on somebody shortly, and certainly before ALL this is over.


Such subtleties escape you.


And everyone seems to know it, too.


And something is rotten with your 'numbers' when I see things like this:


"By contrast, Mr. Obama’s turnout was down from 2008 ... "


Colonel Klink's picture

Yep like your judgement and facts on Tulving being an upstanding guy and good to do business with.

Flakmeister's picture

They were once...

Like I said I was unaware of what has recently happened...

And I freely admitted my error, unlike many here...

Not Too Important's picture

I'm telling you, go see 'Stalingrad' before Friday. Everything you need to know about the Russians is in that movie.

Flakmeister's picture

I thought Enemy at the Gates was a better depiction...

CrashisOptimistic's picture

An ICBM launch at a time like this is probably exactly as claimed, preplanned a year ago and not even on Putin's desk calendar for today.  A complete coincidence.

Flakmeister's picture

Yes, no doubt...

Otherwise it comes across as some kind of schoolyard antic and doesn't make much sense...

TruthInSunshine's picture

Flak, I understand that frustrated feeling, but I'd humbly suggest that the ECB is playing the people of Europe (especially the honest, hard working ones) WAY MORE than Russia has or is (depending on which narrative one clings to).

Fraction Fiat Reserve Racketeering - Even King Kong ain't got NOTHIN' ON DAT SHIT.

Flakmeister's picture

And you are welcome to your opinion...

Colonel Klink's picture

Unless someone disagrees with your delusional thinking.

FlyingDutchman's picture

Well then it seems the message is going down well with his own people, which makes me think he is here to stay. -Unlike...

Element's picture



"Putin has demonstrated that he is all hat and no cattle and that they are incapable of projecting force,"

Given you are a turgid academic nerd who does not grasp how people really live, when not paracitizing tax-payers, this is not going to mean much at all to you.

But, for the average Gunther, and his boss, when the gas goes off, and the beamer plant closes for the interim, and export collapse, and soup kitchens popup every where near locations of riots, that is going to look a lot like they are being forced from afar, via strategic power-projection.

As for nukes, and other weapons, their main role is deterrence and are most effective and best contribute to society when they exist, but are not used (which would be fine if we were to pretend that war mongering assholes don't actually exist), as that provides the social and economic structures and stability needed for Gunther and boss to operate an export economy selling real products.

So useless assholes can paracitize them and lobby for shit like carbon taxes that seriously hurts Gunther's interests and ability to live, just to pay for the sorry useless arseholes, and their jobs and high-brow AGW related expenditure fantasies and lobby for useless massive misallocations of public resources.

Just a little primary school social-studies update for your bodacious book case.


I never cease to be amazed at the unbridled arrogance an staggering myopia of so many bleating fuckwit academics.

LawsofPhysics's picture

Again, "who runs bartertown".  Calories bitchez, nothing else matters.

kchrisc's picture

Putin is a taller "Master Blaster."

headhunt's picture

Cash is all that matters - all else follows.

If Russia accepts gold as payment they will not have the cash flow to run their country.

They could just print more money but no one wants the Ruble.

GoldSilverWolf's picture

Russia is more likely to buy bitcoin from MtGox than US Treasuries.

Sizzurp's picture

What would happen if Russia just said they were happy to provide all the gas the EU wanted, but they have to pay for it in gold?