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Russia's Gas Revenue May Top $100 Bln as Moscow Wins 'First Round' Of 'Energy Battle' - French Media

After Russia launched its special military operation in Ukraine, the US and its allies targeted Moscow with sanctions while issuing calls to reduce dependence on Russian energy resources. The move exacerbated the situation with already soaring gas prices, and prompted Russia to demand that "unfriendly countries" pay for its gas exports in rubles.

Russia may receive a record $100 billion for gas supplies to Europe this year against the backdrop of surging prices for the blue fuel, claims a columnist for the French newspaper Les Echos, citing data from Citi analysts.

Despite "sanctions, loud statements and promises of an embargo," Vincent Colin pointed out that EU member-states funnel $200 million-worth of payments to Gazprom daily.

"Thanks to the surge in prices, Russia should receive $100 billion for gas delivered to Europe this year, which is almost twice as much as in the past, when prices were already high. And this is without taking into account revenues from oil, coal and other raw materials," stated the author.

According to Colin, Russia has "won the first round" of the "energy battle" that was unleashed after the US and its allies targeted it with sanctions over the Ukraine crisis.

Even if the EU starts buying less gas, the jump in prices will compensate for the drop in supplies, insisted the report. Such a profit reaped by Gazprom, according to Colin, has already fully covered the costs of laying the Nord Stream 2 gas pipeline.

Nord Stream 2, running from the Russian coast through the Baltic Sea to Germany and consisting of two strings with a total annual capacity of 55 billion cubic metres of gas was fully completed in September 2021.

As launch work was underway, including technical measures and regulatory approvals, primarily from the German authorities, certification was suspended after Russia recognised the sovereignty of the Donetsk and Lugansk People's Republics in late February. German Foreign Minister Annalena Baerbock said at the time that the project was "effectively frozen".

Furthermore, the US Department of the Treasury on 23 February imposed sanctions on the Nord Stream 2 AG project operator and its managing director Matthias Warnig.

Vincent Colin also weighed in on the European Union threats to go further than the current pledge to dramatically reduce the 27-nation bloc's dependence on Russian oil, gas and coal.

By "threatening the embargo, but not taking any action, the Europeans fell into a trap," he suggested.

In early March, the EU, which gets about 40% of its natural gas from Russia, announced plans to slash its dependence on Russian blue fuel by two-thirds during 2022.

After the US and Britain banned Russian oil in March, on 4 May European Commission President Ursula von der Leyen proposed a sixth package of sanctions, which needs to be unanimously approved by member states to take effect. Among other things, it presupposes banning Russian oil imports.

However, countries like Hungary and Slovakia requested exemptions after saying they were not ready to do so immediately.

Hungarian Prime Minister Viktor Orban warned that a cutoff of Budapest's access to Russian energy would be the equivalent of dropping an "atomic bomb" on the Central European nation's economy. These concerns were echoed by German industrial leaders as well.

Furthermore, in response to sanctions, Russia's President Vladimir Putin issued a decree requiring settling payment for gas deliveries to "unfriendly" nations in rubles.

In late April, Gazprom's press service announced that the company had suspended gas supplies to Poland and Bulgaria due to their rejection of ruble payments. The two countries were cited by Vincent Colin in his analysis of the situation.

"A good example is Poland and Bulgaria. These two countries will no longer buy from Gazprom, because they refused the new ruble settlement system that Vladimir Putin demanded. Bad news for Russia? Not at all! Because, by turning off the taps, the owner of the Kremlin showed that he is ready to carry out his threats," wrote the French observer.

Meanwhile, approximately half of Russia's 54 gas importers have opened ruble accounts with Gazprombank in compliance with Moscow's newly introduced payment rules, said Deputy Prime Minister Alexander Novak on 19 May.

"In the coming days we will see the final list of those who paid in rubles and those who refused to pay," Novak stated, adding that all larger companies have opened accounts, paid for supplies or are ready to pay when they are due.

[Source: By Svetlana Ekimenko, Sputnik, Moscow, 20May22]

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