Russia kept sending gas to Europe all through the Cold War, and more recently in the aftermath of its annexation of Crimea. Moscow is unlikely to want to risk damaging its reputation as a reliable supplier this time around either, according to Uniper SE, one of the top buyers of Russian gas in Europe.

But Biden has warned of severe economic restrictions if Russian troops cross into Ukraine. One big risk to the flow of gas to Europe would be sanctions either cutting Russia off from the ability to trade in foreign currency or other restrictions on its banks. 

“We have to prepare for almost every scenario,” Gregor Pett, executive vice-president of market analytics at Uniper, said in an interview. 

Here’s a look at just what those scenarios could be, and what they mean for a continent that depends on Russia for about a third of its gas. Europe is already reeling from the worst energy crunch since the 1970s, with gas stockpiles running perilously low. Prices have more than doubled in the past six months on fears of war and capped shipments from Russia, even as President Vladimir Putin has repeatedly said he doesn’t plan to invade Ukraine. 

Financial Sanctions

Western powers have said they will consider unplugging Russia from the Swift international payments system, though the idea faces strong opposition from several European countries. Russian banks could also be targeted, but it’s possible there could be exemptions to preserve energy transactions — many of which are carried out in dollars or euros.

Russia Slashes Supplies

In the most extreme scenario, Gazprom PJSC could retaliate to any sanctions by cutting gas supplies to Europe. That would cripple the continent’s energy systems and result in a huge surge in prices. Many see Russia as unlikely to go that far. 

“They would be very reluctant to curtail for two reasons. One is this reputation of being a stable supplier, and the second one is that gas is a major economic factor in Russia,” Uniper’s Pett said.  

Nord Stream 2 Sanctions

In the event there is an invasion, one casualty could be the newly built Nord Stream 2, a multibillion-dollar pipeline from Russia to Germany. The undersea link was expected to boost supply but has been entangled in a highly politicized approval process.

Biden has backed sanctions on Nord Stream 2 if Russia invades, while new German Chancellor Olaf Scholz’s administration has signaled that an escalation of the crisis could mean an end of the pipeline. The market is counting on the 55-billion-cubic-meter capacity pipeline eventually bringing gas, and canceling the project leaves fewer transit options.

Putin has repeatedly pushed for the controversial pipeline, as it offers a direct route into Europe’s hungry markets, avoiding Ukraine.

Russia Cuts Off Ukraine 

Perhaps the bigger uncertainty is what happens to the huge amounts of gas that Russia moves via Ukraine.

Moscow could halt flows through Ukraine in the event of a conflict, said Volodymyr Omelchenko, the head of energy research at Ukraine’s Razumkov Centre. That would give Russia leverage to “dictate its conditions to Ukraine and to the EU.” 

But others aren’t so sure. Russia wants to preserve its position as a reliable supplier, and “I do not see this position changing even in the event of a shooting war with Ukraine,” said Chris Weafer, chief executive officer of Moscow-based Macro-Advisory Ltd. 

At stake is 40 billion cubic meters of gas that Russia is committed to move annually via Ukraine under a contact that ends in 2024. That’s about a third of the Russian gas exported to Europe, and almost half of what Germany consumes annually.

Ukraine Shuts Transit 

This is the least likely scenario, according to Razumkov Centre’s Omelchenko. “This is only possible if there is a damage to the pipes,” he said. If that were to happen, Russia could use the situation to promote the Nord Stream 2 pipeline. 

While Russian gas flows to Europe have been disrupted in the past during disputes with Ukraine over prices, they’ve largely remained uninterrupted — even in the aftermath of the annexation of Crimea in 2014. 

Yet the risks are enormous, with consequences for prices. Should Ukrainian gas transit be affected, replacing the lost volumes wouldn’t be easy. Gazprom could reroute half of the supply to an underused pipeline running through Belarus and Poland. The other half would have to come from open market purchases, which can be expensive.

Boosting transit through Belarus wouldn’t be straightforward either. President Alexander Lukashenko has on numerous occasions threatened to cut off supplies, including in retaliation against any EU sanctions following a migrant crisis.  

Accidents Can Happen

In any conflict, there’s a risk key infrastructure gets damaged, whether on purpose or by accident. That could end up affecting European supplies and prices for years to come.