Is a Return to Russian Gas “Inevitable” for Europe?
On Monday, the Government of Bulgaria said that it was “inevitable” that the southeastern European country would return to using Russian oil and gas. Citing higher prices on the open market, the country said that their economy could not handle continued purchases of gas from other countries outside of Russia. The move comes as more and more European countries are facing the potential of a winter of fuel and energy rationing and questions are raised about the solidarity of Europe against Russia if the worst-case scenario comes to pass.
Looking to Russia to Cut Costs
On Monday, the interim energy minister of Bulgaria, Rossen Hristov, said that it was “inevitable” that Bulgaria would resume gas deliveries from Russia at some point in time. Bulgaria was among several countries who had their import of Russian fuel cut off after refusing to pay Russia in Rubles for its fuel. All deliveries from Russia were halted in April, but the government promised to secure enough fuel for the winter. Now the new interim government, in charge since June, has said that the only way this is possible is with the resumption of Russian oil imports. Before the shutoff in April, Bulgaria received more than 90% of its fuel from Russia and has had trouble finding alternate sources of energy to make up such a dramatic amount. Presently, the nation has been able to receive about one-third of its fuel supply from Azerbaijan and has looked to other countries, such as Turkey and the United States to fulfill the rest; but this process has been expensive and tedious. For example, the interim government announced recently that they had solidified a deal with Cheniere, a US-based gas company, for one cargo of liquified natural gas. This number is far lower than the six cargoes necessary for the winter and which had been secured by the previous government, but at too high of a cost to maintain. According to recent economic data, the wholesale price of gas has jumped by around 60% over the summer, which has caused ripple effects within major industries in Bulgaria and the rest of Europe. Now business leaders in the country are urging the interim government to resume imports of Russian gas in order to stave off an economic crisis. The Russian Ambassador to Bulgaria said that oil imports to the country could be resumed, but the payments must be made in Rubles, a sticking point for most European countries, who have previously paid for oil in Dollars or Euros. Despite pressure from the Bulgarian business sector and surging prices in the open market, Mr. Hristov told reporters that he did not expect the process of resuming Russian oil imports to be easy or quick. “The situation with Gazprom is not rosy at all… We would obviously have to turn to them now. The talks will be very hard and very difficult”, he told assembled reporters on Monday.
The First Domino to Fall?
With the exception of Hungary, who has increased their imports of Russian fuel, nearly all countries inside the EU (of which Bulgaria is a member) have drastically cut their imports of Russian oil, with some completely stopping all imports. Although the European Union has been able to maintain solidarity between member states in its push to rid the group of all Russian gas imports, the stop of Russian imports has put a strain on many countries, including Germany, the largest economy in the bloc. The main pipeline delivering oil directly between Russia and Germany, Nord Stream 1, has cut total flow down to only 20% of its capabilities, a move which many have seen as Russia punishing the EU for their sanctions which came into effect after the Russian invasion of Ukraine. On Friday of last week, Gazprom announced that they would shut down the Nord Stream 1 pipeline for three days from August 31st to September 2nd for maintenance; the second time in a month that Gazprom has temporarily shut down the pipeline which delivers fuel to nearly all of Central Europe. The attempt to find alternatives from Russian oil has forced European countries to look for new suppliers. Oil exporters such as Canada, the United States, Norway, Azerbaijan, Saudi Arabia, and Qatar have all signed deals with various European countries to increase the flow of oil exports. Meanwhile, some European countries have committed to rapidly increasing their usage of renewable sources of energy, while others, such as Germany, have been forced to recommit to coal power despite protests from environmental groups. Although the specific political situation in Bulgaria, a country where President Putin once enjoyed a favorability rating of over 70%, may be different from their partners in Western Europe, there is fear from many economists that a harsh winter of energy rationing and a growing economic crisis in Europe may push solidarity with Ukraine to a breaking point, especially for Western European states such as Germany and France who have repeatedly called for peace to be reached quickly in the conflict.
The growing energy crisis in Europe has shown that no country, not even Germany, is immune from the effects of the war in Ukraine, which is now entering its seventh month. If the turn in policy from Bulgaria is repeated in other European states in which solidarity among the populace with the Ukrainian cause is less secure, it may turn out that the true inevitability was the strong power of Russian energy to influence European politics.