The USA has imposed sanctions on Russia’s Gazprombank. Hungary sees this as an “attack on sovereignty” and warns of risks to gas supply.
The United States has imposed new sanctions on the Russian Gazprombank. These are intended to prevent the state-controlled financial institution from conducting new energy-related transactions that affect the US financial system. The sanctions also target around 50 other Russian banks and the Russian financial messaging system (SPFS).
Hungary strongly criticizes US sanctions
Hungary has strongly criticized the new sanctions. Foreign Minister Péter Szijjártó stated in a press release on Friday that the US decision jeopardizes the energy security of some Central European countries. It increases the risk of an early interruption of Russian gas deliveries to Europe.
Szijjártó described the US move as an “attack on our sovereignty.” He is currently discussing the situation with the energy ministers of Turkey, Azerbaijan, Bulgaria, and Serbia at a meeting in Istanbul, according to the statement.
In addition to Slovakia and Austria, Hungary is one of the few European countries still meeting its energy needs with gas deliveries from Russia. Accordingly, the Slovak Ministry of Economy also expressed concern about the new sanctions. A ministry spokesperson told Bloomberg that they are analyzing them and will provide an assessment shortly.
European countries have so far paid for deliveries through Gazprombank. The new sanctions now increase the risk of being cut off from the supply – at a time when prices are as high as they have been in a year.
Loss of deliveries would intensify competition and drive prices
Although Europe has reduced its dependence on Russia, the loss of the remaining deliveries would have serious consequences. Competition for global deliveries would intensify and drive prices even higher. And this at a time when storage capacities are already depleting faster than usual.
The pipeline route through Ukraine to Europe could also come to a halt after the expiration of the transit agreement between Kiev and Moscow at the end of this year if no alternative agreements are reached.
Russia will continue to accept gas payments despite sanctions
The specific effects of the recent US sanctions are still unclear. Russia has already announced plans to find ways to continue accepting payments from foreign buyers of its natural gas, according to Reuters.
Analysts at Energy Aspects also consider a disruption in gas deliveries to be unlikely, Bloomberg reports. They expect buyers of Russian gas who previously used Gazprombank to switch to other Russian banks to continue their payments.
According to Reuters, analysts see the new sanctions as an attempt by the outgoing US government to “use their available resources in the remaining time.” Whether the sanctions will persist after the inauguration of President-elect Donald Trump is still unclear.
It is also expected that Russia will now move even closer to China. Analysts at Alfa Bank believe that the share of Chinese companies in Russian foreign trade could significantly increase. The situation could therefore lead Chinese companies to consider direct investments in the Russian economy and further intertwine the two countries.
