MOSCOW, April 23 (RIA Novosti) — A lengthy ban on Russian gas imports to the European Union is unlikely, according to the Fitch Ratings' Report 'Living Without Russian Gas.'
In the event of a lengthy ban imposed by the EU, gas-intensive sectors such as steel and petrochemicals would be most seriously affected, the report said.
According to the report, Europe has sufficient liquefied natural gas (LNG) regasification capacity to replace some Russian supplies. Yet most of these plants are located in Southern Europe and in the UK, which makes Central and Eastern European countries most reliant on Russian gas supplies.
Moreover, Europe’s gas demand accounts for almost half of the world’s LNG production, which is already mostly tied to long-term supply contracts. That means, according to Fitch, that gas prices would significantly increase if the EU imposes a ban on Russian imports. Surging gas prices might in turn lead to higher prices on electricity, coal and oil.
The ban could be introduced if the ongoing crisis in Ukraine deteriorates. However, the report notes that a far more likely scenario is a temporary disruption of gas supplies transiting Ukraine. Europe is prepared for such developments with substantial fuel reserves and alternate pipelines.
Last month, Western countries imposed targeted sanctions on several Russian officials and businessmen, including asset freezes and visa bans. Some Western politicians have called for additional sanctions to be imposed on Russia, while others believe they would not contribute to easing tensions in Ukraine.
Moscow has repeatedly warned that talking in the language of sanctions is “inappropriate and counterproductive” and warned its Western partners about the “boomerang effect” that sanctions would have. A number of EU officials have spoken out against broader sanctions, because they might entail serious political and economic consequences for EU member states.
In February, the Ukrainian parliament backed by far-right movements ousted President Viktor Yanukovych, amended the constitution and scheduled an early presidential election for May 25. Moscow has described the uprising in Kiev as an illegitimate fascist coup and a military seizure of power, which resulted in it taking steps to protect ethnic Russians in Ukraine, including the reunification of Crimea.