Russia: Each side could gain from easing of gas war

In early August, Russia’s Gazprom refused to accept a Siemens’ turbine used in Nord Stream 1, citing technical issues. Gazprom is seeking EU guarantees that the latter won’t impose sanctions. Such promises may not be forthcoming, however, so Gazprom could stop exporting gas via Nord Stream 1 to Europe in the coming weeks. Still, we expect any disruption to be temporary. Europe is replacing Russian natural gas with LNG imported from elsewhere, mostly the US. 

What you will learn:

• Notwithstanding the present gas war, it’s in Russia’s interest to continue providing Europe with gas while it builds a new pipeline to China.
• We see scope for an easing in the gas crisis in the coming months.
• A key risk to this scenario is an escalation in the Russia-Ukraine war.