The Unforeseen Consequences of Russia’s Gas Cutoff: How Europe Adapted and Gazprom Struggled

In 2022, Russia made the decision to halt most of its gas deliveries to the EU, causing prices to rise and allowing Russia to earn more despite lower export volumes. This move had immediate consequences for Europe, which heavily relied on Russian gas for energy. With 40% of its gas coming from Russia in 2021, Europe anticipated inflation and possible blackouts as a result of the gas shortage.

However, two years later, Europe’s gas tanks are fuller than ever, thanks to mild winters and increased imports of liquefied natural gas (LNG) from America. Despite this unforeseen circumstance, Gazprom, Russia’s state-owned gas giant is now struggling to make any profits due to these new challenges.

The redirection of the 180 billion cubic meters of gas that Russia once sold to Europe was always going to be a challenge. Russia lacks the infrastructure and technology to ship gas to other markets such as the Nord Stream pipeline to Germany and LNG facilities and tankers. Despite these challenges, gas only made up a small portion of Russia’s overall exports between 2018 and 2023 with oil sales remaining strong despite sanctions.

In conclusion, Russia’s decision to cut off gas supplies had unintended consequences that left Gazprom struggling financially while also forcing Europe to seek alternative sources of energy supply.