in

Sanctions against Russian oil and gas didn’t work, and now we know why.

The Russian war against Ukraine, which began on February 24, 2022, has lasted for about 100 days. Russia’s fossil fuel exports have been widely cited as funding the Russian war and its atrocities.

Sanctions have been applied by the West to reduce its purchases of Russian oil and gas. Russian oil is more important because Russia’s export earnings from oil and its liquid products are much larger than natural gas export earnings.

The United States and Poland stopped their imports of Russian oil, but these did not represent a large part of their energy consumption. Lithuania, Finland and Estonia achieved significant percentage reductions of more than 50%. The UK has announced that it will stop importing Russian oil by the end of 2022. German imports from Russia have fallen from 35% at the start of the war in Ukraine to 12% today. EU countries agreed to a shutdown by the end of 2022, but allowed some derogations for countries like Hungary and Slovakia.

Exports of fossil fuels in the last 12 months.

A new report from the Center for Research on Energy and Clean Air (CREA) has collected data on the transportation of fossil fuels from pipelines and shipping, enough data to estimate Russian export earnings, map trends and suggest the reasons for these trends.

In May 2021, Russian export earnings were 633 million euros/day (note: currently 1 euro is close to the value of 1 dollar). Between May 2021 and May 2022, export volumes fell by 95 million euros/day. The reduced price of Russian oil, etc., caused a decrease of 101 million euros/day. So far, it seemed the sanctions were working.

But then the increase in the price of fossil fuels on the world market outweighed these two effects and led to an increase in export earnings to Russia of 447 million euros/day. Average export prices from Russia were on average 60% higher than last year. By May 2022, export earnings had risen to €883 million per day, an increase of 39% compared to pre-war May 2021.

The price of oil is now above $120/barrel. And Russia derives nearly €1 billion/day, or $1 billion/day, from fossil fuel export revenues. With this you can pay for a huge war effort aimed at Ukraine.

President Putin had claimed that Western embargoes on Russian oil and gas would backfire and drive up world prices. This seems to have happened, although it is difficult to disentangle the various causes of the increase in global demand for oil and gas.

Other report findings.

The 93 billion euros that Russia earned from fossil fuel exports in the first 100 days of the war amounts to almost 1 billion dollars a day with the current exchange rate. Around 60% of this amount came from the EU, which is why it is important that the EU stops buying oil and gas from Russia. Note that coal is a very small fraction of the fossil fuels exported by Russia.

The distribution of these 93 billion euros in export earnings is as follows: crude oil: 46 billion, petroleum products: 13 billion, gas pipeline: 24 billion, LN
NL
G: 5.1 billion, and coal: 4.8 billion.

During this period, China, Germany, France, India, the United Arab Emirates and Saudi Arabia all increased their oil imports from Russia. China is now the biggest importer, since Germany cut spending.

India is a chameleon. They didn’t import anything in January 2022, but that jumped to 28 million barrels of crude in May 2022. The country now buys almost 20% of Russia’s crude exports. This is controversial as significant quantities of products from Indian refineries are then exported to the United States and Europe, according to CREA. This does not support sanctions.

Another aspect that seems to have been overlooked is the transportation by tanker of crude oil from Russia. It has become critical. CREA said that in the April-May period, nearly 70% of shipments were carried by tankers owned by European, British, Norwegian and Greek companies – with Greek tankers carrying more than 40% of Russian crude . This door must be closed.

In another revelation, CREA pointed out that in the first two months of the war, 23 major companies bought fossil fuels from Russia. And that 15 of these companies were still buying in May 2022. These included major oil companies: Exxon, Shell, Total, Repsol, Lukoil, Neste and Orlen.

The current state of high energy prices and the West’s goal to stop relying on Russia’s fossil fuels for Ukraine’s sake has created a tug of war. On the one hand, oil and gas interests want to increase production to reduce the cost of gasoline for our cars. On the other hand, it is an opportunity to accelerate renewable energy and electric vehicles powered by wind, solar and hydropower. The next eight years to 2030 should give us a clearer picture of which team is winning.

#Sanctions #Russian #oil #gas #didnt #work

Post expires at 9:36pm on Saturday June 25th, 2022

What do you think?

Leave a Reply

Your email address will not be published.

GIPHY App Key not set. Please check settings

BMA report finds a third of doctors surveyed are leaving the NHS due to racism

US FDA panel recommends Pfizer, Moderna vaccine for babies and young children