DAVOS, Switzerland — Russian President Vladimir Putin’s bargaining place is “not as strong as he pretends” and Europe has leverage towards him, based on billionaire investor George Soros.

In a letter to Italy’s Prime Minister Mario Draghi, Soros mentioned Putin was “obviously blackmailing Europe” by threatening to — or truly — withholdinging gasoline provides.

“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.

Russian officers weren’t instantly out there for remark when contacted by CNBC Wednesday.

Russia has just lately reduce gasoline provides to Finland arguing the nation will not be paying for it in rubles. The transfer got here after Helsinki introduced its intentions to hitch NATO — the protection alliance that Putin opposes.

Bulgaria and Poland additionally stopped receiving Russian gasoline provides a few weeks in the past. In the wake of Russia’s invasion of Ukraine, Moscow introduced that “unfriendly” nations must pay for Russian gasoline in rubles — a coverage that enables the Kremlin to prop up its personal foreign money.

However, the message from Soros is that European nations have leverage towards Putin too.

The EU, which incorporates 27 nations, receives about 40% of its pure gasoline provides from Russia, making it tough for the bloc to cease shopping for it in a single day.

But, based on Soros, the EU can also be a vital marketplace for the Kremlin and Putin wants the gasoline income to assist his financial system.

“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 mentioned within the letter.

He added that Europe must undertake “urgent preparations” earlier than utilizing its bargaining energy. “Without it the pain of sudden stoppage would be politically very hard to bear,” he mentioned. “Europe should then impose hefty tax on gas imports so that the price to the consumer doesn’t go down.”

Leon Izbicki, an affiliate at Energy Aspects, agrees that Russia’s gasoline storage is near being full.

“Russia went into last winter with record high stocks of around 72.6 billion cubic meters and aims for an even higher underground storage target for winter 2022 of 72.7 billion cubic meters,” Izbicki added by way of electronic mail. “While we do not have visibility on Russian underground storage, it seems plausible that Russia could reach this target this summer already.”

He added that that Russia lacks flexibility in its gasoline storage and doesn’t have the means to divert gasoline from Europe to, for instance, Asia as a consequence of a scarcity of pipeline infrastructure.

Meanwhile, European nations have been scrambling for alternate options to Russian gasoline for the reason that invasion of Ukraine. The EU and the United States, as an example, signed a deal in March to make sure the area would obtain no less than 15 billion cubic meters extra of liquefied pure gasoline (LNG) this yr.

This, coupled with the current cuts in provide to Poland, Bulgaria and Finland — together with worldwide sanctions — implies that Russia is inevitably already promoting much less gasoline to Europe.

“We expect gas flows to Europe to come in at around 98 billion cubic meters this year compared to 141 billion cubic meters last year,” Izbicki mentioned.