Reduction in Russian Gas Supply Would Be Difficult to Replace - S&P Global Ratings

WASHINGTON, (Sputnik) - A reduction in Russia's gas supply to Europe would be difficult to replace should the United States and its European partners cut it off amid an escalation in tensions over the Ukraine situation, S&P Global Ratings said on Tuesday.

"A reduction in Russia's gas supplies to Europe will be difficult to replace," S&P Global Ratings said in a report.

The report said that although a recent increase in liquefied natural gas (LNG) flows to Europe, combined with mild weather in Europe and Asia, may help offset the ongoing reduction in Russian gas exports for the coming weeks, the amount of Russian gas output is too large to replace without affecting the global gas markets.

In addition, the report said Russia would not be expected to impose an export ban of gas supply to Europe because it benefits from its profitable gas exports and cannot easily redirect gas supply from its major fields to other markets.

S&P Global Ratings predicts gas supplies will continue to flow from Russia to Europe under most scenarios with respect to the tensions between Russia and the West.

The United States and its European partners have mulled sanctions targeting Russia's energy supplies over the situation in Ukraine. The Biden administration has recently been encouraging major energy producers to increase production. However, US media reported that sanctions on Russian energy is off the table for now.

The precarious situation around Ukraine has worsened over the past several months after Russia was accused of building up troops near the Ukrainian border and allegedly preparing for an invasion. Moscow has denied the accusations, pointing to NATO's military activity near Russian borders, which it deems a threat to its national security.