On Monday, Russian Deputy Prime Minister Alexander Novak threatened to cut natural gas supply via Nord Stream 1 to Germany to respond to a series of sanctions (including the shutting down of Nord Stream 2) imposed by the West over its invasion of Ukraine.
“In connection with unfounded accusations against Russia regarding the energy crisis in Europe and the imposition of a ban on Nord Stream 2, we have every right to take a matching decision and impose an embargo on gas pumping through the Nord Stream 1 gas pipeline,” Novak said, adding that the Kremlin had yet not decided to shut down the pipeline.
Deputy PM of the Russian Federation Alexander #Novak: We are fully entitled to take a “mirror” decision and place an embargo on gas transit via Nord Stream 1 which is presently running at 100 percent capacity.
— Russian Embassy, UK (@RussianEmbassy) March 7, 2022
We have not taken that decision yet.
🔗https://t.co/0joSrIItFs pic.twitter.com/cs5vrdwWPL
Additionally, Novak warned of “catastrophic consequences for the global market,” with the price of one barrel surging to $300 or more, if the United States (US) and the European Union (EU) banned Russian imports. “We are concerned by the discussion and statements we are seeing regarding a possible embargo on Russian oil and petrochemicals, on phasing them out,” remarked Novak.
In fact, gas prices in the European market have already surged by almost 80% amid the Ukraine crisis and fear of disruption to Russian supplies. Natural gas prices in Europe are expected to soar even further if Russia follows through on its threat.
Last month, Germany suspended Nord Stream 2, an $11 billion underwater gas pipeline connecting Russia to Germany, after Russian President Vladimir Putin declared two eastern Ukrainian separatist territories—Luhansk and Donetsk—as independent territories. Additionally, EU officials said that they are working on a plan to reduce Europe’s dependence on Russia for oil and gas by 80% this year.
However, many European countries, particularly Germany, remain wary of imposing an embargo on oil imports from Russia. On Monday, German Chancellor Olaf Scholz rejected calls from the US and Ukraine to ban oil and gas imports from Russia as part of broader international sanctions against Moscow. Scholz said Russian oil and gas are essential to the European economy, as they make up to 40% of the EU’s gas imports and one-third of oil imports.
In a statement, Scholz said, “Europe has deliberately exempted energy supplies from Russia from sanctions,” adding, “At the moment, Europe’s supply of energy for heat generation, mobility, power supply and industry cannot be secured in any other way. It is therefore of essential importance for the provision of public services and the daily lives of our citizens.”
Despite repeated calls to reduce dependence on Russia, the EU has failed to adequately diversify its portfolio. In this regard, Scholz said European allies, including his government, have been working to develop alternatives to Russian energy for months but emphasised that progress cannot be achieved overnight. “That is why it is a conscious decision on our part to continue the activities of business enterprises in the area of energy supply with Russia,” he added.
German Minister of Foreign Affairs Annalena Baerbock supported Scholz’s stance as well.
In contrast, European Trade Commissioner Valdis Dombrovskis said, “Nothing should be off the table... We should do more, because this aggression, unfortunately, is not stopping so we should see a way—in a sense—to stop Putin’s ability to finance this war.” Echoing this sentiment, British Prime Minister Boris Johnson said a ban on Russian oil import must be discussed.
Scholz’s comments came after the US Secretary of State, Antony Blinken said that the US and the EU are discussing a ban on Russian oil imports, a call that was then echoed by Ukrainian President Volodymyr Zelensky.
In fact, senior officials from the White House and the State Department departed for Caracas on Saturday to see if the Maduro administration is willing to distance itself from longtime ally Russia. Putin has played a great hand in helping Venezuelan state-run oil company PDVSA evade United States (US) sanctions. It has been rumoured that US officials could offer the hope of sanctions relief in return for a change in Venezuela’s position on the Ukraine conflict. At the same time, the US is seeking an alternative energy supplier to Russia as it expands its sanctions on the Putin regime over its decision to invade Ukraine. Following the meeting, Venezuelan President Nicolás Maduro said he held “respectful, cordial, [and] very diplomatic” talks but did not offer any more information.