What happens if Europe's gas is cut off this winter? 

Flows in the key Nord Stream 1 pipeline were cut to 40% of the pipeline's capacity and then to only 20% in the past few months. 

Rationing of gas, the fuel used by many countries including Ireland to generate electricity, is "likely but not inevitable" this winter, although any move by Russia to cut completely its gas exports would lead to a deep recession in the eurozone, a major study has warned. 

The analysis by Andrew Kenningham, chief Europe economist at Capital Economics, comes amid mixed signals on Kremlin plans for supplying gas to Europe. Key gas supplies to European industry and households have been in doubt since Russia invaded Ukraine on February 24.

Gas supplies to Latvia resumed late last week, a week after they were halted by Russian exporter Gazprom, new figures on Tuesday showed. Gazprom had said on July 30 it had stopped sending gas to Latvia after accusing the Baltic country of violating supply conditions.  

However, fears continue about whether Russia will increase its leverage over the EU's support for Ukraine by further squeezing or ending in the coming months its supplies of energy products to western Europe. Ireland, although not directly connected to the continental gas system, would likely be affected because gas prices would likely soar further.              

Mr Kenningham in the research note said that Russia has already taken measures to restrict gas supplies, including in March passing a decree for “unfriendly” states to pay for their gas in rubles; in April, by cutting off the gas to Poland and Bulgaria; and in subsequent months restricting gas flows down the key Nord Stream 1 pipeline that connects western Europe and, in particular Germany, with Russia. 

Flows were cut to 40% of the pipeline's capacity and then to only 20%. This has helped to send European gas prices surging to €200 per mega watt hour  this year from €100 per MW hour, and "astonishingly, this is more than 10 times their average in the decade to 2020," Mr Kenningham said in the research.

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"Europe’s energy crisis is already imposing a huge cost on the eurozone economy and things would get worse in the winter if Russia stops selling any gas to Europe," he said. 

"An end to Russian gas exports to Europe would prompt us to forecast a deeper recession in the eurozone this winter than we currently anticipate. The hit would come partly through higher inflation, which would further squeeze real incomes, and partly through gas rationing, which would particularly affect industry," according to the research. 

In a bid to build winter reserves against any move by the Kremlin, the EU has agreed voluntary cuts to gas consumption to next March. It is also seeking liquified natural gas, or LNG, supplies from across the world, while Germany and Italy seek to build floating storage facilities for the long term.  

Although "gas rationing is likely, but not inevitable", it remains uncertain whether gas imports could make up any shortfall in the EU should Russia cut off the gas, according to the analysis.