Thursday, September 28

G-7 nations face threat of Russia shutting down more gas

Russian President Vladimir Putin makes a toast as he takes part in the XIV BRICS summit in virtual format via a video call, in Moscow on June 23, 2022.

Michael Metzel | AFP | Getty Images

The Group of 7 nations need to brace for a complete shutdown of Russian gas pipelines in the near term, and it could have severe consequences for Europe’s economy, one analyst warned.

“The G-7 have to prepare for a shutdown of gas. The G-7 can deal with a cutback on oil. There are other supplies that could be gotten around the world, but the gas could be shut off and that would have consequences ,” said Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, told CNBC on Monday.

“Russia already has cut back substantially on gas flowing to Germany and through Ukraine, so shutting down the pipelines is not inconceivable. Russia also sells some LNG to Europe but not that much,” he said in an email after the interview.

“The total cut-off of Russian supplies would prompt gas rationing at least for the short term,” he said. “Russian supplies would be partially offset by increased LNG imports, increased supplies from Norway and Algeria, fuel-switching to coal, and conservation measures,” Schott added.

Gazprom, Russia’s state-backed energy supplier, has reduced its gas flows to Europe by about 60% over the past few weeks. The move prompted Germany, Italy, Austria and the Netherlands to all indicate they could turn back to coal once again.

His comments came as the leaders of the G-7 wealthiest nations met in Munich, Germany, for their latest summit.

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As global pressure continues to pile on Russia over its assault on Ukraine, Europe is facing “a very tight situation,” Schott told CNBC’s “Street Signs Asia” on Monday.

“They’re playing for time. The more there is a hostility against Russia, the more Putin threatens and perhaps acts to cut off more gas to Europe. I see that coming sooner rather than later,” he added.

Growing concerns in Europe

The action taken to stop buying Russian gold is one small step in the right direction.

Jeffrey Schott

Peterson Institute for International Economics

Banning Russian gold

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