Russian President Vladimir Putin delivered a speech during a ceremony honoring the country’s Olympics and Paralympics at the Moscow Kremlin in Russia on April 26, 2022.
Maxim Shemetov | Reuters
DAVOS, Switzerland – Russian President Vladimir Putin’s negotiating position is “not as strong as he claims” and Europe has an influence against him, according to billionaire investor George Soros.
In a letter to Italian Prime Minister Mario Draghi, Soros said Putin was “obviously blackmailing Europe” by threatening – or actually threatening to withhold gas supplies.
“That’s what he did last season. He put stored gas instead of supplying gas to Europe. That created shortages, raised prices and made a lot of money, but his bargaining position is not as strong as he intends, “Soros wrote. Monday.
Russian officials were not immediately available for comment when CNBC contacted them on Wednesday.
Russia has recently cut off gas supplies to Finland, arguing that the country does not pay in rubles. The move comes after Helsinki announced its intentions to join NATO, the defense alliance Putin opposes.
Bulgaria and Poland also stopped receiving supplies of Russian gas a couple of weeks ago. Following the Russian invasion of Ukraine, Moscow announced that “non-friendly” nations should pay for Russian gas in rubles, a policy that allows the Kremlin to shore up its own currency.
However, Soros’s message is that European countries also have influence against Putin.
Hungarian-born American investor and philanthropist George Soros.
Fabrice Coffrini | AFP | Getty Images
The EU, which includes 27 countries, receives about 40% of its natural gas supply from Russia, making it difficult for the bloc to stop buying it overnight.
But according to Soros, the EU is also a very important market for the Kremlin and Putin needs gas revenues to support his economy.
“Russia’s storage capacity is estimated to be full in July. Europe is its only market. If it does not supply Europe, it will have to close the wells in Siberia where the gas comes from. There are about 12,000 wells involved. it’s time to close them and once they’re closed, it’s hard to reopen them because of the team’s age, “Soros said in the letter.
He added that Europe must undertake “urgent preparations” before using its bargaining power. “Without it, the pain of the sudden stoppage would be politically very difficult to bear,” he said. “Europe should then impose a heavy tax on gas imports so that consumer prices do not fall.”
Leon Asbicki, an associate of Energy Aspects, agrees that Russia’s gas storage is about to be filled.
“Russia entered last winter with a record stock of about 72.6 billion cubic meters and aims for an even higher underground storage target for the winter of 2022 of 72.7 billion cubic meters,” he said. add Izbicki by email. “While we have no visibility on Russian underground storage, it seems plausible that Russia could achieve this goal as early as this summer.”
He added that Russia has no flexibility in its gas storage and does not have the means to divert gas from Europe to, for example, Asia due to the lack of pipeline infrastructure.
Meanwhile, European countries have been fighting for alternatives to Russian gas since the invasion of Ukraine. The EU and the United States, for example, signed an agreement in March to ensure that the region would receive at least 15 billion cubic meters more liquefied natural gas (LNG) this year.
This, together with the recent cuts in supply to Poland, Bulgaria and Finland, along with international sanctions, means that, inevitably, Russia is already selling less gas to Europe.
“We expect gas flows in Europe to reach around 98 billion cubic meters this year compared to 141 billion cubic meters last year,” Izbicki said.