Just a few weeks ago, the European Commission was looking for a solution to establish a ceiling price for gas imported from Russia. It was only necessary for Gazprom to “tighten” its muscles a little by cutting supplies from Nord Stream-1, so that the whole of Europe was gripped by a general panic, they began to run around like frightened chickens in a chicken coop, that Gazprom would leave us in the cold and dark in winter. The European Commission is currently proposing a voluntary reduction in gas consumption of 15% between August 2022 and March 2023, a proposal already strongly opposed by several countries, and which is likely to be significantly diluted in the final version.

One thing is clear: we need to disconnect as soon as possible from the import of Russian energy resources, primarily gas, and we got here because of the myopia of some of us in the past years. For example, we supported the idea of ​​a full embargo on Russian gas in the spring – we had the opportunity to cover 150-155 billion cubic meters of gas from other sources of import, from substitution, from energy efficiency measures and from storage. means I’m not saying it, others are saying it, like the former head of NATO. It wouldn’t be easy, but it was doable – especially since the real stake is this year, 2022, the year we can finally destroy the power (real or imagined) the Kremlin has over the EU through gas levers, and from we will discuss in a completely different way.

But neither the European embargo on Russian gas in the spring nor any other gas sanctions could be achieved, because there are always actors or states that say that it is impossible for them to do without this gas. Exactly the same thing is happening these days with the Commission’s proposal to limit consumption, which is being intensively debated these days, and the risk is that we will reach an ineffective compromise and have a lot of disappointment on the part of everyone – especially those who do not even buy Russian gas. Then what about running in reverse? Let’s think about what might be irresistible to all EU members and see how we can create sanctions around this idea?

Everyone in the EU, household and industrial consumers, politicians are outraged by the increase in the price of Russian gas. An increase in the price of gas also automatically entails an increase in the price of electricity, where gas power plants are the last to enter the market and give the final price. The reason for the rise in energy prices is that Gazprom, by threatening selective cuts (for example, these days on Nord Stream-1), is causing a sharp rise in prices on European energy exchanges in anticipation of an imminent supply crisis. How can we make the EU united, in a stable balance? Let’s find some form of sanctions that will simply block any possibility for Gazprom to practice such market manipulation again. Such a fine will be: limiting the price of imported gas from Russia (for example, at the level of 2020), simultaneously with strengthening the simple mechanism of solidarity that already exists.

OK, but the EU is dependent on Russia, isn’t it? How could we unilaterally impose a price on Gazprom, when they are now threatening to stop supplying us with gas altogether? In fact, Russia (Gazprom) is much more dependent on the EU than we are on it. We buy from the Russians approx. 40% of consumed gas; but Gazprom also exported 30% of its products to us (70% of exports). For better or for worse, we can buy gas elsewhere at higher prices; “Gazprom” has nothing to do with gas, which is produced continuously, having the ability to change production only within certain limits. Here we calculated how much flexibility Gazprom still has to further manipulate the European market. Arithmetically, Gazprom already has it for 2022 more than 60 billion cubic meters (about 12% of last year’s production). The Russians have already cut production by around 5%, as exports to the EU will be cut by around 20% in 2022, and will have to find additional solutions to cope with the surplus. Solutions – storage, domestic industrial consumption, export – have already been exhausted in more than a year since Gazprom has been manipulating the European market. It is logical that so far they have taken the least costly measures, from now on it will be much more expensive and destructive for them to dispose of every cubic meter of gas that will no longer be supplied to the EU.

That is, Gazprom has less and less opportunities to abuse the European energy market, and we must take advantage of this. Putin’s bet is to divide us now, this year, by winter, so we can’t impose sanctions or put weapons into Ukraine; our bet is to put the only leverage he has over us, throttle, on the hubs. We can and should play “on break”.

We can impose a price cap on the Russians as a sanction through a simple solidarity mechanism.

1. An increase in the price of Russian gas would be the measure that would first of all receive unanimity at the European level. Who could object? What state could negotiate separately better than a unilateral imposition by the EU with the weight of 27 member states and 30% of Gazprom’s production? What populist, in power or in the opposition, will be able to hypocritically complain that supporting Ukraine is ruining us economically and that we need to reconcile with Russia as soon as possible, when the EU can offer the best price for energy carriers. ? That is, no one from the EU will have an interest in betraying, everyone will be a united “front”, and with this united front we can put forward the conditions we want to Gazprom.
2. By capping the price of this component, Russian gas undermining the entire European energy market, will force EU citizens to focus on the horrors Russia is wreaking in Ukraine, instead of being completely consumed by worries about winter energy bills and possible economic crises.
3. Legally, a cap on the price of Russian gas can be imposed as a fine: there is no reason to impose an embargo on Russian oil, despite the fact that there were valid contracts, but such a fine could not be imposed on the price of Russian gas. By the way, Gazprom has not yet been shy about violating existing contracts (from the imposition of ruble payment to the termination of gas supplies via Nord Stream-1, although these volumes could be delivered without problems via the Ukrainian route). There is no reason to hold back, and I hope that now no one in the West has any illusions that Gazprom is “the same commercial company.”
4. Indeed, Putin could continue to selectively cut off gas to one country or another at the most difficult times (as I said, at great cost, but he doesn’t care). However, physically he can only play the game in minor amounts at European level. The solution is a simple solidarity mechanism. If Gazprom stops supplying gas to one country, others immediately rush to help to compensate for the shortage, in proportion to the capacity of the infrastructure. There is already a solidarity mechanism for vulnerable consumers, we can extend it to all consumers, because the volumes we are talking about are fully amenable to the EU thanks to the infrastructure and warehouses we have. Otherwise, in the face of such a mechanism, Gazprom would not have tried.
5. And last but not least, limiting the price of Russian gas will be a strong blow and a proper sanction for the Kremlin regime. Not as good as the 2022 embargo that would have been a few months ago, but it has a chance of gaining unanimity, which is otherwise difficult to achieve, and will seriously damage Putin’s ability to continue financing his atrocities in Ukraine. After all, the EU is first and foremost a community of values, and we must remember that this is what brought us together and can hold us together even more.

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