US in talks with energy producers about alternative gas supplies for Europe

US president Joe Biden has said he would consider imposing sanctions on the Russian leader Vladimir Putin if he orders an invasion of Ukraine.

The president again on Tuesday maintained there would be "serious economic consequences " for Russia if it sent troops into Ukraine.

Asked whether he could see Mr Putin himself becoming a target for sanctions, Mr Biden replied: “Yes. I would see that.”

Earlier senior Biden administration officials signalled that there would not be a phased response from the US to any Russian invasion of Ukraine.

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“That means the gradualism of the past is out, and this time we’ll start at the top of the escalation ladder and stay there. We’ve made efforts to signal this intention very clearly.

“And I would say the deepening sell-off in Russian markets, its borrowing costs, the value of its currency, market-implied default risk reflect the severity of the economic consequences we can and will impose on the Russian economy in the event of a further invasion,” a senior official said.

In addition to any financial sanctions, the US is also looking at the imposition “novel export controls that would deal Putin a weak strategic hand over the medium term”.

These would include sophisticated technologies that are designed and produced in the United States.

“If you step back and look at the global dominance of US-origin software, technology, and tooling, the export control options we’re considering alongside our allies and partners would hit Putin’s strategic ambitions to industrialise his economy quite hard.

“And it would impair areas that are of importance to him, whether it’s in artificial intelligence or quantum computing, or defence, or aerospace, or other key sectors.”

“While our actions and the EU’s actions may not be identical, we are unified in our intention to impose massive consequences that would deliver a severe and immediate blow to Russia and over time make its economy even more brittle and undercut Putin’s aspirations to exert influence on the world stage,” one senior official said.

Gas supplies

The Biden administration also believes that any move by Mr Putin to restrict or withhold gas supplies to western Europe as part of any conflict over Ukraine could also hurt the Russian economy.

“This is a one-dimensional economy, and that means it needs oil and gas revenues at least as much as Europe needs its energy supply.”

“So remember, oil and gas export revenues are two-thirds of the total in Russia and about half of Russia’s federal budget revenues. So this is not an asymmetric advantage for Putin; it’s an interdependency.”

The Biden administration also indicated that it was in talks with major energy-producing countries and companies around the world over a potential diversion of supplies to Europe if Russia invaded Ukraine and its gas exports were restricted or blocked.

“We’re working with countries and companies around the world to ensure the security of supply and to mitigate against price shocks affecting both the American people and the global economy. “

“A disruption in the physical energy supplies transiting Ukraine would, clearly, most acutely affect natural gas markets in Europe. And so we’re engaging our European allies to coordinate our response planning, including talking to them how they deploy their existing energy stockpiles, which are, obviously, at significantly low levels this year due to the reduced Russian supplies over the last several months.”

A senior official said the Biden administration had been working "to identify additional volumes of non-Russian natural gas from various areas of the world -- from North Africa and the Middle East to Asia and the United States".

“Correspondingly, we’re in discussions with major natural gas producers around the globe to understand their capacity and willingness to temporarily surge natural gas output and to allocate these volumes to European buyers.”