© Wikipedia - Government.ru Novy Urengoy CC BY 3.0Zapolyarnoye gas field
Russia can shut down its natural gas exports to the EU entirely for more than a year, without inflicting significant damage on the national economy, Bloomberg has reported, citing strategists at Capital Economics.
In light of the current price situation, Russia's "balance of payments is in such a strong position that, if oil prices and oil exports remain at current levels, Russia could keep gas exports to Europe at 20% of normal levels for at least three years," analysts at the consultancy said in a note seen by the agency.
A year-long supply cut-off by Russia could happen "without adverse consequences for its economy," Liam Peach, one of the economists at Capital Economic said.
According to Peach, despite reduced volumes, Russia's quarterly earnings generated by gas exports could amount to $20 billion.
"Whether or not Russia turns off the taps completely will be a political decision and the length of any cut-off would depend on the size of offsetting oil revenues," Peach said.
Several European leaders have repeatedly accused Moscow of using gas as a weapon of political pressure, with the Kremlin rejecting the allegation. The latest technical problems with Nord Stream 1 pipeline, a key gas route from Russia to Europe, prompted Gazprom to slash deliveries, sending prices skyrocketing.
Another major test for the market is expected to arise next week, when the energy giant halts gas flows through Nord Stream 1 for three days due for maintenance work, starting on August 31.
And they can even afford to flare it off instead ...