Russia prepared to re-route gas flows if punished with sanctions
Russian finance minister Anton Siluanov has warned the West the country is ready to shift supplies to other markets should any sanctions target its energy sector.
Siluanov did not reveal how Moscow would divert its energy exports, but expected that Russia’s foreign exchange reserves, national wealth fund and a budget surplus would shield its economy and banks from any possible measures imposed on the country.
He accepted that while sanctions against Russian banks would be “unpleasant”, the state would ensure all deposits with banks, all transactions, including in foreign currencies are secured.
The US and its allies are considering new sanctions including against Russia’s largest banks, economy and energy sector, with export controls possible, in the event that Moscow invades its neighbour Ukraine.
However recent reports from new agency Reuters suggest it will not include banning Russia from the SWIFT financial system.
The minister also revealed hiked prices to European markets would be inevitable following any measures from the West.
He explained: “Any export curbs would result in rising prices, and if such restrictions are to be applied then increases in prices should largely offset such curbs.
Tensions simmer amid Ukraine uncertainty
The Kremlin’s stance follows yesterday’s rallying cry from EU President Ursula von der Leyen, where she argued Europe would be prepared to manage partial disruptions to gas flows from Russia.
Russia is currently responsible for 40 per cent of the EU’s natural gas supplies, with the continent reeling from an energy crisis this winter.
However, the country’s budget is also highly dependent on energy sales to European Union member states via state-backed Gazprom.
This month, Russia agreed to sell an additional 10bn cubic metres of gas to China per year by 2025 in a $118bn.
However, this equates to only five per cent Moscow’s current exports to Europe.
The Kremlin is also awaiting Europe’s decision on whether to approve the already constructed Nord Stream 2 pipeline which would double supplies between Russia and Germany, providing 55bn cubic metres of gas on an annual basis.
Moscow has claimed it has partially withdrawn troops since yesterday, after it amassed 140,000 troops near Ukraine’s border over the past two month.
However, NATO chief Jens Stoltenberg has suggested Russia is continuing to build up troops, and that the movements of some forces away from the border does not confirm a withdrawal.
Russia has denied that it has plans to invade the country, although there is some confusion over whether it is withdrawing troops from the border.
The country’s options to re-route pipeline gas from Europe are limited, but it may have greater flexibility with oil exports of which around a half, or some two million barrels per day are delivered to Europe by the sea.