Russia’s Energy Leverage in Europe: Interdependence, Control, and Influence
Russia and Europe remain deeply intertwined in the energy sphere. In 2016, Russia supplied over 70 percent of natural gas and one-third of crude oil consumed by OECD countries, accounting for roughly 75 percent of Russia’s gas exports and 60 percent of its oil exports. These sales generated more than a third of the Russian federal budget that year.
Given the strategic value of these revenues, the Kremlin has maintained strict control over the energy sector. Two levers are key: a state monopoly on energy exports and the ability to direct nominally private energy companies to align with government objectives. This gives Moscow direct influence over supply to European markets and allows it to use energy as a geopolitical tool—to pressure governments, reward allies, and shape domestic politics abroad.
Intermediary Schemes: A Vehicle for Political Influence
One method Russia has used to project influence is through energy intermediary schemes. These involve offering discounted gas to approved middlemen who then sell at market rates abroad, pocketing the margin. In other cases, long-term contracts are signed at fixed prices, and select intermediaries are allowed to deliver gas via cheaper routes, again profiting from the differential. These arrangements not only generate personal wealth for the intermediaries but also foster loyal constituencies in foreign countries with a vested interest in maintaining favorable relations with Moscow.
Case Studies Across Europe
Italy
In one alleged case, senior Russian officials reportedly explored supplying diesel at a discount to Italy’s state energy company, with the aim of diverting the margin to a political party ahead of European elections. The proposal involved a Russian firm linked to a sanctioned businessman. Although the deal’s execution was never confirmed, the episode illustrates the type of arrangement Russia has allegedly pursued elsewhere.
Hungary
Between 2011 and 2015, Hungary’s state energy company MVM, through its subsidiary MVMP, reportedly imported gas from MET International—a Swiss-registered trader partly owned by Hungarian and Russian stakeholders. MET allegedly bought Russian-origin gas cheaply, sold it to MVMP, and then repurchased it for cross-border delivery at a markup. A government decree reportedly granted MET monopoly access to a key pipeline, enabling it to sell gas domestically at market prices. Analysts estimate the scheme generated more than $200 million in profit in a single year, benefiting politically connected elites. The arrangement is believed to have been carried out with tacit approval from Moscow.
Lithuania
In Lithuania, the Swiss-based firm LT Gas Stream, reportedly linked to Gazprom, became a key intermediary after a local trader ceased direct purchases from Russia. LT Gas Stream allegedly secured discounted gas from Gazprom but sold it domestically at market rates, raising concerns about transparency and potential hidden ownership by politically connected individuals.
Bulgaria
Bulgaria, heavily dependent on Russian energy, long relied on intermediaries such as Overgas and WIEE—companies with Russian ownership stakes. In 2012, the state energy firm Bulgargaz signed a direct contract with Gazprom. By 2016, Gazprom had exited Overgas, and legal disputes followed as Bulgargaz and Gazprom sought to consolidate control and marginalize Overgas. These moves were seen as part of broader efforts to revive stalled pipeline projects and maintain Russian influence in the Bulgarian energy sector.
Wider Implications
These intermediary arrangements highlight how energy trade can be manipulated for strategic gain. Beyond economic profit, they create entrenched networks of influence in European countries—linking political elites, state-owned enterprises, and foreign suppliers. For Moscow, such schemes are a tool to advance geopolitical goals while rewarding loyal actors abroad.