Russia sanctions: How can the world cope without its oil and gas?

A-key-Russian-gas-pipeline.webp September 16, 2022

A key Russian gas pipeline has remained closed, severely limiting supplies as European countries struggle with high energy prices.

Western countries are trying to cut their dependency on Russian oil and gas following the invasion of Ukraine in February.
How much Russian gas does Europe use?

Russia supplied the EU with 40% of its natural gas last year.

Germany, Europe’s largest economy, was the largest importer in 2021, followed by Italy.
Gas exports

In 2021, the UK imported 4% of its needs from Russia, and in June this year, it imported no Russian gas for the third month in a row.

The US doesn’t import any gas from Russia.

However, they are affected when Russia restricts supplies to mainland Europe, as this causes global gas prices to rise.

What impact are sanctions having?

Since February, the EU has imposed a number of sanction packages on Russia, including on its energy industry.

The Kremlin has said that “technological problems” caused by Western sanctions are preventing Russia from supplying gas via the Nord Stream pipeline. It says a leak has been detected in a turbine.

But a spokesperson for the EU told the BBC the sanctions regime does not affect the technology needed for the transport of gas into Europe.

Siemens Energy, which produces the gas turbines, said these type of leaks “do not normally affect the operation of a turbine”.

“This doesn’t seem like a legitimate reason to close a pipeline”, says Ben McWilliams, an energy policy expert at Bruegel. “I’m as confident as I can be that this is Putin’s latest move to manipulate gas prices and put pressure on Europe’s energy systems.”

Gazprom has also said missing documents have prevented certain gas turbines being maintained – but Siemens Energy has rejected the suggestion it failed to provide the relevant paperwork.

Russian-gas-flow.webp September 16, 2022

The EU has proposed a price cap on Russian gas. President Putin has threatened to cut off all energy supplies if it takes such a step.

The EU has also said it will cut gas imports from Russia by two-thirds within a year, but has stopped short of a total ban.

To help it reach its goal, member states have agreed to cut gas usage by 15% over the next seven months.

There’s doubt over where the EU will find alternative supplies, and it may need to ship in liquefied natural gas (LNG) in tankers from producers like the US and Qatar.

Energy advisor Kate Dourian says that “there aren’t enough LNG terminals in Europe. This will be a problem for Germany, particularly.”

Will Europe run short of oil?

The EU has agreed to ban all Russian oil imports which come in by sea by the end of this year.

It will allow oil to continue to be imported by pipeline, as a “temporary measure” because countries like Hungary and Slovakia depend on it.

Some European nations could still have their oil supplies significantly squeezed by the ban.

Lithuania and Finland got about 80% of their oil from Russia in November last year, the latest data available.

However, EU countries can buy oil from other producers.

Earlier this year, the IEA – a club of oil importing countries – agreed to release 120m barrels-worth of crude from their stocks, and President Biden ordered a major release of oil from America’s reserves.

The US has declared a complete ban on Russian oil imports, and the volume of oil imports by the UK has fallen sharply in the last year.
Are sanctions working?

Helped by soaring energy prices, Russia received an estimated €400bn ($430bn, £341bn) over the past year from oil and gas exports to Europe.

The EU says its latest sanctions could cut the amount of oil it buys from Russia by 90%. However, this will take months to come into full effect, and even then Russia will be able to sell oil elsewhere in the world.

India and China have both been buying more Russian crude in recent months.


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