- Discounted Russian gas is hitting European markets, as reported by the Center for European Policy Analysis.
- The markdowns are part of the Kremlin’s efforts to regain Western buyers, according to the think tank.
- This strategy could also influence support for the continued use of a major transit route through Ukraine.
Russia has unleashed discounted gas onto European markets in an attempt to maintain countries reliant on its energy supply, according to the Center for European Policy Analysis.
This strategy aims to garner support for a crucial transit deal between Russia and the West, explained by the think tank. The contract for a major pipeline is set to expire in less than six months, potentially ending a historic trade route through Ukraine — the decision to renew lies with Kyiv.
“The stakes are high. The Ukrainian transit decision will impact not only the country’s security but also Europe’s future energy policies and the future of the Russian gas industry,” wrote non-resident senior fellow Aura Sabadus.
Following Russia’s aggression in Ukraine in 2022, a dip in European buyers led to significant losses for Russia’s gas industry. Gazprom, the state-run gas giant, reported its largest loss in 25 years, with estimates suggesting it may take a decade to recover lost sales.
Although alternative markets helped somewhat, CEPA noted Russia’s efforts to win back European customers. Discounted gas prices, at least 10% off, are already affecting Central and Eastern European markets, with Slovakia, Hungary, and Austria showing interest in Russian gas.
This pricing strategy and access to different routes offer potential for greater profits for European companies, according to Sabadus. It may help Gazprom rebuild its market share.
Southern European traders are benefiting by purchasing discounted Russian gas through a Turkish pipeline and selling it at higher prices in Western European markets, as suggested by Sabadus.
Ukrainian politicians have stated they will not renew the contract, but war-damaged energy infrastructure may push them towards obtaining gas from suppliers like Poland, as suggested by CEPA.
