DAVOS, Switzerland — Russian President Vladimir Putin’s bargaining position is “not as strong as he pretends” and Europe has leverage against him, according to billionaire investor George Soros.
In a letter to Italy’s prime minister, Mario Draghi, Soros said Putin was “obviously blackmailing Europe” by threatening to — or actually — withholding gas supplies.
“That’s what he did last season. He put gas in storage rather than supplying gas to Europe. This created a shortage, raised prices and earned him a lot of money, but his bargaining position is not as strong as he pretends,” Soros wrote Monday....
The EU, which is made up of 27 countries, receives about 40% of its natural gas supplies from Russia, making it difficult for the bloc to stop buying it overnight.
But, according to Soros, the EU is also a very important market for the Kremlin and Putin needs the gas revenue to support his economy.
“It is estimated that Russian storage capacity will be full by July. Europe is his only market. If he doesn’t supply Europe, he must shut down the wells in Siberia from where the gas comes. Some 12,000 wells are involved. It takes time to shut them down and once they are shut down, they are difficult to reopen because of the age of the equipment,” Soros said in the letter.
That makes perfect sense. If he cannot sell it, he either burns it off at the wellhead, destroying future Russian wealth, or he resumes sales to enemy nations. If they can find replacement sources (Norway, U.K., U.S., nuclear power for electrical heating and factory use), they can say, "No thank you" or demand a lower price.
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