US Scrambles For “Contingency Plans” From Energy Firms On Gas Supply Crunch Amid Russia-Ukraine Crisis

By Tyler Durden

It appears that both Washington and Kiev are still convinced that Russia is preparing a military offensive against Ukraine to happen at some point by the close of January. Despite Western estimates echoed over the past couple months that some 100,000 Russian troops are currently near the border, Moscow has been vehement in its denial that it’s planning any kind of invasion.

But Moscow is pointing the finger right back at NATO, with on Sunday Putin’s spokesman admitting Russian troops are on the border because it can no longer “tolerate” NATO’s own “gradual invasion” of Ukraine.

Sunday comments by Dmitry Peskov were firm in their denunciation of NATO’s continued expansion right up to Russia’s doorstep. “Unfortunately, not fixed in a juridical, in a legally binding guaranteeing document, but it — there was a guarantee that NATO would never… expand its military infrastructure or political infrastructure eastwards,” Peskov told CNN.

“Unfortunately, the opposite thing started to happen since then, and NATO’s military infrastructure started to get closer and closer to the borders of the Russian Federation,” he added. Russia now sees its national security as directly threatened and “endangered” – the Kremlin spokesman added.

Within the past days of ratcheting tit-for-tat accusations, it’s also been revealed that the Biden administration is seeking to reassure European partners of ‘contingency plans’ should a Ukraine-Russia conflict disrupt the transfer of energy supplies to the European Union. Russia is the source for up to one-third of all of Europe’s critical gas supplies.

The Biden White House is still threatening severe sanctions, which also holds the potential for Russia using its energy supplies as a retaliatory weaponReuters revealed in its weekend reporting that “State Department officials approached the companies to ask where additional supplies might come from if they were needed, two industry sources familiar with the discussions told Reuters, speaking on condition of anonymity due to the sensitivity of the matter.”

“The companies told the U.S. government officials that global gas supplies are tight and that there is little gas available to substitute large volumes from Russia, the industry sources said” – in what amounts to stating the obvious to a US administration that seems bent on escalating a showdown with Russia.

“We’ve discussed a range of contingencies and we’ve talked about all that we’re doing with our nation state partners and allies,” the State Department sources told Reuters of these ongoing attempts to engage international energy companies. “We’ve done this with the European Commission, but we’ve also done it with energy companies. It’s accurate to say that we’ve spoken to them about our concerns and spoken to them about a range of contingencies, but there wasn’t any sort of ask when it comes to production.”

Talks with the international companies were reportedly led by the US admin’s senior advisor for energy security Amos Hochstein: “The State Department did not ask the companies to increase output, the official added.” The report adds,”As well as asking companies what capacity they had to raise supplies, U.S. officials also asked whether companies had the capacity to increase exports and postpone field maintenance if necessary, the sources said.”

And of the major companies which were likely approached, Reuters notes, “It was unclear which companies U.S. officials contacted. Royal Dutch Shell, ConocoPhillips and Exxon declined to comment when asked if they had been contacted. Chevron Corp, Total, Equinor and Qatar Energy did not immediately respond to a request for comment.”

Should Russia dial back supplies via its Eastern European pipelines, the Biden administration would in actuality find itself with no counter-leverage, as Europe would feel the immediate pain of further heightened energy prices and lack of supply amid a frigid winter. And yet still these vague promises are being made:

“The United States promised to have Europe’s back if there is an energy shortage due to conflict or sanctions,” the second industry source said.

“Amos is going to big LNG producing companies and countries like Qatar to see if they can help the United States,” he added, referring to Hochstein.

While the above suggests some level of desperation, the US has also continued putting the option of additional sanctions on the Russia-to-Germany Nord Stream 2 pipeline on the table. Putin at the same time has recently cast the project as stabilizing soaring gas prices for Europe, even as America’s Western allies have charged him with doing precisely the opposite.

Meanwhile, Germany is still trying to figure out how to delicately position itself in all of this, given NS2 has resulted in accusation of compromise from the US and other Western partners…

Source: ZeroHedge

Image: Bloomberg

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