Ukraine Crisis and the ‘Gas Game’

Over the last few days, tensions between Russia and the United States-NATO have been rising over the Ukraine issue. Ukraine and the Western countries have alleged Russia of amassing 120,000 troops at the Ukraine border, a move that the Ukrainians look suspiciously at, fearing potential Russian aggression. However, Russia has consistently denied these charges of hostility while the West, especially the United States, has threatened Moscow to impose severe sanctions.

Surprisingly, amid the browbeating by US President Biden and his administration over the Ukraine issue, the Ukrainian leadership has publicly downplayed the threat of Russian invasion. In fact, Ukraine President Volodymyr Zelensky has accused the Western media of undermining the faith of Ukrainians in their government and stoking economic panic across the nation. This deemphasizing by Ukraine has raised a question over American intentions to keep the issue boiling. In this regard, if we look at some of the recent energy deals and dialogues taking place across Europe, we may perhaps get our answer.

Ukraine Crisis and the ‘Gas Game’

Qatar as a replacement for Russia

Russia caters to around one-third of Europe’s gas needs. Meanwhile, under the fear of alleged Russian aggression, the US has asked Qatar and other major global energy producers to divert energy supplies to Europe. Sensing an opportunity, Qatar has demanded that the European Union resolve their long-running investigation into its gas contracts. Moreover, Qatar has reportedly communicated its interest in long term gas deals with the EU compared to spot contracts or short-term crisis solutions.

Poland-Saudi Arabia oil deal

The US threat mongering about the potential Russian attack has successfully instilled fears across Europe, especially Eastern Europe. The fears have grown in the recent past amid verbal duels between the US and Russia. As a consequence of these fears, Poland will sell a stake in its oil refineries to Saudi Arabia. The proposed deal will put two-thirds of the Polish oil supply under the control of Saudi Arabia and displace Russia as the largest oil supplier.

Nord Stream 2

Right from its start, the Nord Stream 2 gas pipeline supplying natural gas from Russia to Germany has been an eyesore for the United States. The US has put a lot of its diplomatic influence to make somehow Germany cancel this project. However, the firm resolve of Russian President Vladimir Putin and support to this project from German leadership has ensured its completion.

Besides, the Nord Stream 2 bypasses Ukraine, thereby making it a non-player in the gas game in Europe. Moreover, once fully operational, Nord Stream 2 is set to reduce Ukraine’s gas transit revenues from $2.5 billion to $1.2 billion annually. Thus, Ukraine has naturally allied with the US in opposition to the Russo-German project. With the Ukraine crisis at its peak, the United States and even the European Union have threatened to impose severe sanctions against Nord Stream 2 if Russia attacks Ukraine.

Considering these warnings, perpetual denials by Russia about any aggression and the latest statement by Russian President Putin that the US is drawing Russia into some kind of armed conflict, it appears that sanctions on Nord Stream 2 and Russian gas supply are not a consequence of the Ukraine crisis, but Ukraine crisis is planned to hit Russian gas and energy trade with Europe. The situation gives the US, which is currently the biggest gas producer in the world, a needed pretext to suspend Russian gas supplies to Europe. If it happens, it will be a win for the United States in its trade war with Russia and a move that will checkmate the Nord Stream 2 project.

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