Professor Samir Dani revealed that although gas prices rose before the war, Russia has exacerbated the crisis by using its resources as “leverage” against European states that rely heavily on Russian gas.
He added that Russia is now turning towards China, spurred on by Europe’s plans to go green and its reluctance to continue buying Russian energy.
The comments come as a report suggesting that an existing pipeline from Russia to China could completely replace German imports through the Nord Stream 1 pipeline in favor of China.
While not all German gas imports are going through the pipeline, it could significantly boost revenues for Moscow at a time when the West is trying to starve the Kremlin of cash.
dr. Dani is Professor of Operations Management and Deputy Director of Keele Business School and an expert on energy and natural gas supply and pricing.
He said: “With the current news about Russia that gas from Gazprom to Germany has reduced by 40 percent, they are giving the reason as maintenance and certain parts are not available, etc.
“However, you can see that Russia has switched off gas to other countries, because they do not pay in rubles. It has become a kind of leverage because they know that Europe is completely dependent on Europe coming from Russia.”
Many European countries rely heavily on Russian energy imports to both heat their homes and fuel their economies, although a concerted effort has been made to reduce dependence on Russian energy.
Professor Dani said Europe’s reluctance to continue its reliance on Russian energy was part of a larger plan for Moscow to turn to energy-hungry China.
He said: “Russia may be rebalancing to sell more to China because China is really hungry for energy right now. Natural gas or whatever they can find.”
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He added: “We have recently seen that there has been political cooperation between Russia and China on a new pipeline for energy, both gas and oil, from Russia to China.”
“In the long run, they may be trying to rebalance their supply because they know Europe has long-term plans to go green and natural gas and oil won’t fit that bill if they have clean energy in the future.”
A report from the Center for Strategic & International Studies (CSIS) last month looked at what such a pivot to China might look like.
They found that in 2021 Russia sold about 33 billion cubic meters (bcm) of natural gas to Asia, compared to an average of 160-200bcm to Europe per year, about two-fifths of Europe’s energy needs.
However, once the Power of Siberia pipeline starts operating at full capacity, Russia could supply China with approximately 60 billion cm of gas per year with its existing infrastructure. By comparison, in 2018, Germany received 57 billion cc of Russian gas from the Nord Stream 1 pipeline.
While the shift appears to be underway, Dr. Dani noted that it would take time for Russia to replace revenues from European gas imports.
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He said: “This is an important theme for Russia. There are some activities to turn the shift of sales from West to East. However, it will take time due to capacity issues, logistical issues and political systems.”
The CSIS report claimed that Russia could sell about 120 billion cm of gas to Asia by 2030.
If the war in Ukraine comes to a stalemate and long-term Western sanctions against Russia remain in place, the sale would likely help prop up Russia’s economy as Europe stops buying its energy.
However, the report noted that Russia would never have “market power” in Asia, that is, dominate the energy market as it has in Europe.