A ceiling for Russian gas price will deprive the EU of the cheapest energy source

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to the Ekonomika Segodnya publication on the prospects for Russian gas supplies to the European market and the likelihood of introducing a “price ceiling” for them.

Russian gas exports to the EU in 2022 decreased by five times, Alexey Belogoryev noted. However, if Europe does not need cheap raw materials, the Russian Federation will reorient supplies to other markets.

The worst has already happened

“The rupture of relations has already occurred: the volume of Russian supplies has decreased by five times compared to last year. Gazprom currently supplies 2.3 billion cubic meters of gas per month, which is less than 80 million cubic meters per day. Last year, this figure was at around 400-450 million cubic meters per day. There is no guarantee that these volumes will remain until the end of the year,” the energy expert concludes.

The worst thing that could happen in our gas relations has already happened.

“European countries are trying to reorient themselves from Gazprom to other suppliers by concluding long-term contracts for the supply of LNG. Even if we assume that political relations between the Russian Federation and the EU will suddenly normalize, European energy companies will not be able to return to the old volumes of purchases in Russia due to the presence of contracts with other states,” Belogoryev states.

A compromise between the Russian Federation and the EU will be reached sooner or later, and this will restore part of the losses, but the compensation will not be one hundred percent. We will have to face a different reality in the European gas market.

“Russian gas has remained competitive on the European market in terms of price. Gazprom's deliveries have always been among the cheapest in Europe and remain so even this year. The EU is losing a lot here, but a similar process is taking place in the area of ​​Russian oil, oil products and coal, which fell under the previous packages of sanctions,” Belogoryev sums up.