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By: Erica Lu, Andres Cotter, Johan Cho

& the Ukraine Invasion

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  1. Upstream: Gazprom extracts natural gas
  2. Midstream: Gas is transported via massive pipelines like:
    1. Nord Stream 1
    2. Yamal-Europe
    3. Bratstvo pipeline
    4. Nord Stream 2
  3. Downstream:
    • European energy companies receive the gas.
    • These companies distribute it through utilities to the consumer:
      1. Homes
      2. Industries
      3. Businesses

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Supply Chain Overview – How Gazprom Supplied Europe

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When Russia invaded Ukraine in February 2022, the EU, U.S., and other countries responded with economic sanctions — blocking exports, and freezing assets. In retaliation, Russia turned energy into a weapon.

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The Disruption – The Ukraine War and Gazprom’s Gas Cuts

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This disruption didn’t just affect one company. It impacted every layer of the supply chain. The chain broke from the top down, and every tier suffered. 

Stakeholder Impacts – Who Got Hit and How

GAZPROM

PIPLINE

EUROPEAN ENERGY COMPANIES

GOVERNMENTS

CONSUMERS

  • Lost access to its largest and most profitable market
  • Faced massive revenue drops and credibility damage
  • Began pivoting its infrastructure and strategy toward Asia
  • Nord 1 was shut down, Nord 2 was scrapped
  • Billions of dollars of infrastructure became useless
  • Other pipelines through Ukraine became high-risk or disrupted
  • Faced huge supply shortages and price volatility
  • Were forced to buy more expensive LNG (liquefied natural gas) from the U.S., Qatar, and others
  • Some companies were bailed out by governments to avoid bankruptcy�

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  • Activated emergency energy reserves
  • Created new energy policies to track renewables and LNG terminals
  • Began shifting to other suppliers like Norway, the U.S., and Algeria
  • Experienced massive spikes in gas and electricity prices
  • Many households across Europe faced energy poverty — unable to afford heating
  • Industries dependent on gas (like chemical and steel plants) had to cut or shut down temporarily. �

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Unexpected Outcomes – Positive & Negative

Positive Outcomes

  • Energy independence became a priority; EU countries reduced Russian gas imports from 40% to under ~15% in less than a year.
  • Europe further increased investment into renewables (solar, wind), nuclear, and energy.
  • LNG terminal construction accelerated. Germany opened its first-ever LNG terminal in 2022.
  • New global energy partnerships were formed, reducing Europe’s reliance on Russia.

Negative Outcomes

  • Global natural gas prices soared; part of post-covid inflation.
  • Many EU countries had to temporarily burn more coal, backtracking on climate goals.
  • Massive government spending (for energy subsidies) strained budgets.

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  • This crisis is a textbook example of a geopolitical supply chain disruption.
  • It began with political conflict and led to supply chain disruptions, shortages, that in turn could lead to future political conflict.
  • It shows how infrastructure-based supply chains (like pipelines) are uniquely vulnerable.
  • It also shows that countries and companies can adapt when forced — by investing in diversification, resilience, and innovation.

Conclusion – Lessons from the Gazprom Crisis

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