Which European Countries Will Suffer The Most If Russia Turns Off The Gas

Tyler Durden's picture




 

With the Sunday Crimean referendum seemingly unstoppable now, its outcome certain, it is set to unleash a chain of events that is not entirely predictable but is at best, ominous, as it will involve the launch of trade, economic and financial sanctions against Russia (despite China's stern disapproval), which will lead to a "symmetric" response in kind by Moscow. And in a worst case escalation scenario, should game theory completely collapse and everyone starts defecting from a cooperative equilibrium state, the first thing to go will be European gas exports from Russia, anywhere from one day to indefinitely. So which European countries are most exposed to the whims of Gazprom? The following map from the WSJ, shows just how reliant on Russian gas exports most European countries are.

One wonders just how "stern" any sanctions these countries support and enforce against Russia will truly be. Then again, as the WSJ reports, Europe somehow believes that despite its massive reliance on Ukraine for energy, it can weather a storm:

Mr. Oettinger says Europe is now in a stronger position to withstand possible disruptions in supplies, thanks in part to a mild winter, more storage capacity and pipeline infrastructure that allows more gas to flow from west to east.

 

But he has also said that the EU should reach out to other gas exporters and build more terminals for liquefied natural gas, and that countries should also start exploratory work on shale gas.

 

"The Russians are now more dependent on our money than we are on their gas," said Mr. Wieczorkiewicz, adding that around half of Russia's revenues are derived from oil and gas sales. "The EU could also explore ties to Norway, Algeria and Qatar as alternative suppliers, increase the use of coal and import LNG."

 

But in the short term, others argue that the EU is short of options if it wants to use energy as a tool against Moscow. "Russia remains the largest exporter of gas to the EU; there's no way of [quickly] sourcing those amounts of gas elsewhere," said Simon Pirani of the Oxford Institute for Energy Studies.

 

"Europe has to ask itself how important is the economic relationship with Russia, which provides that cheap energy, and how important is the political protest that it wants to make" about Crimea, he said.

So who wins in the end: the provider of the commodity, or the buyer who pays with infinitely dilutable fiat, especially if any further escalation by the west against Russia will merely bring China and Russia together even closer. Somehow we think our money is on the KGB spy instead of the clueless and insolvent European bureaucrats.

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Thu, 03/13/2014 - 16:33 | 4544792 barliman
barliman's picture

 

Bottom line .... ALL of them

Thu, 03/13/2014 - 16:40 | 4544830 Thought Processor
Thought Processor's picture

 

 

Behold, the reset button is about to be pushed.

 

Hang on tight people.  Things are about to get hairy.

Thu, 03/13/2014 - 16:47 | 4544858 MeMadMax
MeMadMax's picture

Leftist europeons and their wishful, delusional thinking...

 

Next winter is gonna be a cluster fuck, thats for sure...

Thu, 03/13/2014 - 16:51 | 4544877 I am more equal...
I am more equal than others's picture

 

 

Want to see an economy collapse? 

Increase energy costs by 100%. 

All the printing in the world won't make a difference if that happens.

Thu, 03/13/2014 - 16:57 | 4544899 jbvtme
jbvtme's picture

off topic...kenny boy alive  https://www.startjoin.com/whereskennyboy

Thu, 03/13/2014 - 19:46 | 4545726 Surly Bear
Surly Bear's picture

Fix the problem: Not a single dollar to the Mid East, Russia, or China. Sorry, no, you cannot import those fucking iPhones....

Thu, 03/13/2014 - 17:02 | 4544924 Unknown User
Unknown User's picture

Russia already responded to this threat. They will do nothing because they export gas and import goods so sanctions will only hurt countries like Germany.

 

Thu, 03/13/2014 - 17:26 | 4545086 giggler321
giggler321's picture

This is all about their failed attempt in ME over Syria.  If they wanted a war it would of happened there as the USA and allies had their chance to start one and gave up when Putin turned it Nuclear.

Right now, it's pay backs as they know what ever happens, boots on the ground, spread the Russian's thin, make them pay.  It costs money for troops, it costs money for lost land due to votes in neighbouring countries, it costs Russia - That's what this is all this about.

This situation right now will not end in war even if Putin took Ukraine by force (it's not as if they ain't more than half Russian anyhow) all you would get in results is a lot of talk and a weaker Russia.  Putting bombs in Poland, Romainia, whereever will always be countered with S<make up your number> system (300,400,500) but importantly at a cost - a cost to Russia.

Thu, 03/13/2014 - 20:31 | 4545863 123dobryden
123dobryden's picture

i am almost enjoying this...

 

we should buid a huge huge arena for politicians of various cleptocrasies to fight each other barehand or medieval weapons

 

 

Thu, 03/13/2014 - 17:09 | 4544977 SDShack
SDShack's picture

Yep, $145/barrel oil did it in 2008. It is being engineered again. Rinse & Repeat

Thu, 03/13/2014 - 17:18 | 4545025 Seer
Seer's picture

Ever consider that it's been woefully underpriced for a long time and that they can no longer supress the real costs?  And if not now, one day for certain the affordability will be far less than today.

My theory is that there's a bit of a coordinated effort to ease it to what it'll eventually be: neither buyers or sellers will find the future friendly.  We're pretty much in global recession yet oil's still hoovering around $100: consumption is dropping; growth projections are all low- economies of scale in reverse is starting to kick in (margins increasingly under greater and greater pressure).

Thu, 03/13/2014 - 18:13 | 4545326 thestarl
thestarl's picture

Capex costs increasing 11% a year its a worry.

Thu, 03/13/2014 - 17:11 | 4544988 Urban Redneck
Urban Redneck's picture

Playing with gas pipelines is the weak hand.  Simply withdraw 5.5 million barrels of day of OIL from the world market for a few days, and then slowly ramp back up in 1 million barrel increments, and watch both oil and gas prices spike along with profits and European wisdom (while all the consumption based economies and the banks that prop them up go into meltdown)... Force majeure in light of any sanctions is a great excuse to void any and all existing oil delivery contracts with EU States and renegotiate terms more appropriately.

Thu, 03/13/2014 - 17:23 | 4545056 Seer
Seer's picture

OPEC just announced a reduction in output targets.

And I'm sure that this isn't the only instance of over-optimism:

http://www.bloomberg.com/news/2014-03-13/gulf-keystone-falls-most-in-two...

As a percentage more income will be going toward energy.  It's pretty much like a drug addiction.  Discretionary income is becoming less.

Thu, 03/13/2014 - 19:23 | 4545630 logicalman
logicalman's picture

Your comment....

Leftist europeons and their wishful, delusional thinking

Add to that American Stupidity and Arrogance.

But really in both cases, we are not talking about the people of either region, but the criminal thugs in control.

Countries are just another 'divide and conquer' method.

Please engage brain before putting keyboard into gear.

 

Thu, 03/13/2014 - 16:53 | 4544882 reTARD
reTARD's picture

Exactly. That's why they created the EU, a grand collectivist union where everyone is their brother's keeper.

Thu, 03/13/2014 - 17:02 | 4544928 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

But they will never be each other's brothers. And that is why too much integration and centralization fails at the end of the day. People define borders, borders don't define people. You can't shuffle them around fast enough because there isn't enough money or energy to sufficiently keep the stirring the mixer.

Thu, 03/13/2014 - 17:14 | 4545005 reTARD
reTARD's picture

Agreed. The same applies to forced diversity. Those people are the ones who are racist and who look at skin color.

Thu, 03/13/2014 - 18:57 | 4545517 25or6to4
25or6to4's picture

@Tard
Thank you. Diversity will end up in the same trash heap as communism and other failed ideologies hopefully sooner than latter.

Thu, 03/13/2014 - 19:26 | 4545642 logicalman
logicalman's picture

WHAT THE FUCK IS WRONG WITH DIVERSITY?????

The problem we really suffer from is the psychopaths vs decent human beings.

Everything else is just distractions that the psychopaths use against their enemy, HUMANITY.

Diversity enriches, it doesn't diminish.

Thu, 03/13/2014 - 20:18 | 4545818 reTARD
reTARD's picture

I'm for diversity too. More variety is good. But the keyword was "forced." That would be centrally planned and forced diversity to meet someone's quota of X percent people of various skin colors. Personally, I don't look at people for their skin color but only at their individuality, values and skills. Should I care if there was a Caucasian who happens to be an excellent cook of Chinese food? I'd be more concerned about the end product than the person who creates/delivers it.

And if some people don't want diversity, that's okay with me too. There is a difference between not wanting diversity and just plain being racist too. That's just preference.

Fri, 03/14/2014 - 03:38 | 4546838 Mad_max
Mad_max's picture

It's Marxist Racism. Just as was Nazism.

They just replaced the Jewish hegemonic idea with the white male hegemonic conspiracy.

Hence the Multiculturism, white priviledge, quotas etc.

It's all depresingly inevitable, as Marxism always falls on a need to identify a hegemonic class on whom to lay the blame. Race is an easy on to pick. White male have lots of wealth, hence white males are the oppresors/ Jews.

 

Thu, 03/13/2014 - 17:25 | 4545079 Seer
Seer's picture

Regionalization.  Why NWO would never have worked: and that has been my position.

Thu, 03/13/2014 - 18:36 | 4545414 Researchtime
Researchtime's picture

Game theory thought - Ukraine

The problem about the Ukraine is that the protestors overthrew a democratically elected government who was making some desperate economic decisions with the EU purposely fomenting one side over the other.  Ironically, by not recognising a dominant Russian based group to have their democratic right, the West are contradicting themselves making us look less democratic over what we would consider, a relatively authoritarian state…  The problem is the two leaders; Obama on Europe's bidding, and Putin, have publicly placed themselves at situational cross roads whereby neither can back down, or be seen to give ground without serious reputation damage.  Putin has the most to lose initially, and arguably has been very restrained to date.  A man who has a diverse country, a relatively poor economy, can only play the (arguably strong suit) unified Russian Motherland angle - otherwise all is lost.  Putin is the perfect archaically player.  Obama's problem is twofold.  Firstly, the EU, in particular Germany, induced this game.  Despite distancing themselves initially, Obama allowed the US to make declarations it did not want to make nor can it realistically keep.  This plays into a second problem in that in recent years the US looks like losing its global hegemony (i.e. Pax America); that having a military complex at your disposal is quite useless unless you willing to use it.  Obama's indecisiveness and prevaricating to date has created a dangerous situation in a number places around the world where America has vested interests.  To maintain their illusion of invincibility, the game dictates that Obama maybe forced to overreact in this situation order to stablise other far more important geopolitical issues. There is no Nash equilibria in this situation, consequently, forward induction suggests that for lasting resolution one side has to be forced to back down publicly.  The problem for the West is that I think Putin has already pre-played the game and  set up the chess board before them.  The EU is now on the hook for billions of dollars of subsidies annually into perpetuity.  If not the Ukrainian population will increasingly become more poor, desperate and radicalise, which plays into Russia's hand.  This inevitability allows Russia to play the hardball waiting game to achieve their best outcome.  The EU on the other hand is pretty broke and cannot literally afford to financially support Ukraine without risking financial instability and the overall EU project.  Forward induction implies that the EU has to provoke a crisis to get Russian to the table to support the Ukrainian state economically whilst achieving their own political ends.  A contradiction in terms.  This is not going to end well. For a relatively innocuous country economically, this game of headmanship could have very large financial implications. 

 

Fri, 03/14/2014 - 06:48 | 4546949 Perfecthedge
Perfecthedge's picture

Remind me to never play chess against you.

Well analyzed (golf clapp).

Thu, 03/13/2014 - 16:34 | 4544796 naughtius maximus
naughtius maximus's picture

5.8% to 49.5% Not too good gradiation there

Thu, 03/13/2014 - 16:35 | 4544797 TeamDepends
TeamDepends's picture

Does one country shiver harder than another?

Thu, 03/13/2014 - 16:35 | 4544802 williambanzai7
williambanzai7's picture

Thu, 03/13/2014 - 16:42 | 4544840 Rakshas
Rakshas's picture

I just threw up on my child ......... man a little warning please.....er .. are those real??

Thu, 03/13/2014 - 16:50 | 4544869 williambanzai7
williambanzai7's picture

As you know, real is relative...

Thu, 03/13/2014 - 17:08 | 4544965 vic and blood
vic and blood's picture

LMAO!!

Thu, 03/13/2014 - 17:03 | 4544935 Black Forest
Black Forest's picture

Excellent. Thanks.

Thu, 03/13/2014 - 17:19 | 4545040 vic and blood
vic and blood's picture

Hilarious! Got to put that on my desktop.

Thu, 03/13/2014 - 19:32 | 4545664 logicalman
logicalman's picture

One of your very best!

Thu, 03/13/2014 - 16:37 | 4544810 inflatio_in_aeternum
inflatio_in_aeternum's picture

Time to short nat gas.

Thu, 03/13/2014 - 16:39 | 4544821 29.5 hours
29.5 hours's picture

 

 

Certain idiots in Congress are already speculating that the U.S., with all its fantastic increase in fracking reserves, could export surplus to Europe.

No dice. The U.S. still has an energy deficit, despite all propaganda.

"Despite a boom in U.S. energy production, average costs for heating a home with propane will likely be 54 percent higher for this winter (October 2013 through March 2014) than a year ago, the U.S. Energy Information Administration reported
"

Thu, 03/13/2014 - 17:08 | 4544963 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Whether they can or can't is not the issue it is about making money and that money includes building infrastructure getting the ban undone is last move in the game barring a game changing find of reserves in European region. It is not just the US but other players like Canada that benefit. Shipping LNG gets Great Britain for starters from being reliant on Qatar LNG since that is their dominant market. They dominant even the Russians in that segment of the gas market in Western Europe.

Thu, 03/13/2014 - 16:40 | 4544829 ersatzteil
ersatzteil's picture

Seen this plot play out before; Sarkozy running around trying to broker peace and influence Putin during the 2008 South Ossetian War. 

*SPOILER ALERT* It ends with Putin holding onto whatever he takes. End credits, exit stage left...

Thu, 03/13/2014 - 16:46 | 4544852 H. Perowne
H. Perowne's picture

This is looking more and more like a trilogy to me.

Thu, 03/13/2014 - 17:43 | 4545195 d_senti
d_senti's picture

Holger Danske Vagner...the west could use a guardian about now...

Thu, 03/13/2014 - 16:40 | 4544832 FuzzyDunlop21
FuzzyDunlop21's picture

Does anyone really think spineless Obama will actually go through with it? And I know his supporters are clinically brain dead, but I cant even see them agreeing with his decision to help Ukraine. Hell, I bet the only time they've heard of Ukraine was from watching that show on Nickelodeon with the Aggro Crag.

Thu, 03/13/2014 - 16:45 | 4544839 papaswamp
papaswamp's picture

If it does get shut off it will motivate the EU to topple Syria and let the pipeline the Saudis wanted get installed to refeed Europe. Side play would be the shipping angle for those investing in turmoil. ( assuming it happens). BDI might start running up if this scenario get worse....much less people start shooting at boats ( ala Libya).

For you boobie fans...
pic.twitter.com/SdSOd5Z99j

Thu, 03/13/2014 - 16:42 | 4544843 Dr. Engali
Dr. Engali's picture

"The Russians are now more dependent on our money than we are on their gas"

So that's what we are calling the Euro now?......., money? Lol..... That's funny.

Thu, 03/13/2014 - 17:04 | 4544947 Perimetr
Perimetr's picture

"The Russians are now more dependent on our money than we are on their gas"

Soon the Russians will ask for *real* money, i.e. gold, in exchange for their gas and other commodities having intrinsic value.  

Thu, 03/13/2014 - 19:02 | 4545547 SimplePrinciple
SimplePrinciple's picture

That's okay.  Germany has thousands of tons of gold, uh, doesn't it?

Thu, 03/13/2014 - 19:03 | 4545556 ILLILLILLI
ILLILLILLI's picture

That might put some real pressure on the US to return the German gold...a nice side-benefit "fuck you" to the US.

Thu, 03/13/2014 - 17:52 | 4545245 August
August's picture

"The Russians are now more dependent on our money than we are on their gas"

And never forget the near-total dependence of Russia on the EU for hand-bags and couture.

Thu, 03/13/2014 - 16:49 | 4544867 WTFUD
WTFUD's picture

Which colour of the rainbow shall we call this Charade OR are those already used up?

Thu, 03/13/2014 - 16:52 | 4544878 Oldballplayer
Oldballplayer's picture

I laughed out loud the other day when Peter King was saying we should send LNG to Europe. 

My wife asked me why I was laughing.  I told her it was because we could send LNG to Europe, in about ten years.  AND, our Natural Gas supply is at about 40% of its normal inventory.

We will be working our assess off the next four months getting our inventory back up to inventory levels for the winter of 2015.

This talk is just bullshit.

Long cord wood in German forests.

Thu, 03/13/2014 - 17:11 | 4544989 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Not when you can fill the tankers in the gulf of Mexico and ship them northwards. It is all about the money. The infrastructure to pipe it to the east coast and create the filing stations comes afterwards. If it becomes a 'national security' interest it will happen yesterday if enough money and jobs created are involved right now.

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