Page 28 - RusRPTAug22

Analysts say that a complete cut off of gas during the autumn is unlikely as once the gas stops flowing completely Russia precipitates a full-blown energy crisis, loses its European gas market forever and ends the revenue stream it currently earns from gas that is also bleeding the European exchequers of money. More likely is that Russia will maintain gas flows at less than sufficient levels to keep the pressure on Brussels and to keep gas prices at crisis levels, reserving the threat of a total shut down for the winter and as leverage during talks to possibly end the war in Ukraine.
2.11 Fill European gas tanks to 80% by October, necessary but not sufficient requirement to get through winter
The logic of the Kremlin
Gas market participants surveyed by Goldman Sachs at the beginning of the week (The Bell studied the report of the investment bank) did not seriously believe that Nord Stream would not start working again from July 21 - they correctly predicted the restart scenario at 40% capacity, explaining the logic of this solutions for Russia.
Firstly, resetting deliveries via Nord Stream would deprive Russia of flexibility in making further decisions - after all, “there is only one direction left from zero - up.”
Secondly, the complete shutdown of Europe from gas will still hit the revenues of the Russian budget.
And thirdly, stopping the gas pipeline will force Gazprom to mothball its production facilities (which is not so scary for it, but still undesirable) - it is technologically impossible to redirect gas destined for Europe to other markets, Goldman Sachs lists in its report.
Independent energy expert Sergei Vakulenko describes Russia’s tactics as follows: on the one hand, to demonstrate a legalistic approach (“we fulfill all the obligations that we can, taking into account force majeure created by the European side and Ukraine”) and not completely break off trade relations with Europe, to make it easier to restore them when the situation returns to normal (which the Russian side seems to be counting on), on the other hand, to continue to receive significant revenue. But all this - to the extent that it does not prevent the creation of an energy crisis in Europe next winter.
The ultimate goal, as in any war, is to inflict enough pain on the enemy to force him to change his policy; in the case of Russia, to force Europe to abandon support for Ukraine and restore relations with the Kremlin, Vakulenko sums up.
How Europe will survive the winter
Europe's gas supply and demand situation "hangs in the balance," Dames Henderson, head of the gas program at the Oxford Institute for Energy Studies, told The Bell. In the short term, the main task is to maximize the filling of gas storage facilities. Now they are 65% full, the goal (achievable with the
28 RUSSIA Country Report October 2020 www.intellinews.com