Shocking images from the Ukrainian town of Bucha and Russian war crimes charges are pushing for more sanctions against Moscow. A key potential target: Russian oil and natural gas, and the $850 million that European importers pay every day for these supplies. But it’s not that easy, given Europe’s dependence on Russian energy.
Western sanctions so far have targeted Russian banks and companies, but spared oil and gas payments – a US concession to keep European allies on board and present a united front. Here are the key facts about Europe’s energy imports from Russia and whether a boycott is possible.
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What offer is in play?
The European Union gets around 40% of its natural gas from Russia, which is used to heat homes, generate electricity and supply industry with both energy and a key raw material for products such as than fertilizers. For petroleum, it’s about 25%, most of which goes to gasoline and diesel for vehicles. Russia supplies about 14% of the diesel, according to S&P Global analysts, and a cut could send already high fuel prices for trucks and tractors skyrocketing.
Why can’t the EU cut off Russian gas supplies like the US did?
The United States has imported little oil and no natural gas from Russia because it has become a major producer and exporter of oil and gas through hydraulic fracturing. Europe had some oil and gas deposits, but production declined, leaving the 27 EU countries dependent on imports.
Of the 155 billion cubic meters of gas that Europe imports from Russia each year, 140 billion passes through gas pipelines crossing Ukraine, Poland and under the Baltic Sea. Europe is scrambling to secure additional supplies by ship in the form of liquefied natural gas, or LNG, but that cannot make up for the loss of gas by pipeline.
LNG is also much more expensive and suppliers are exhausted. While some European countries are well connected to LNG terminals, such as Spain, and new projects are underway in places like Greece and Poland, the infrastructure is not there to supply the rest of the world. Europe. Building LNG import terminals and pipelines to connect gas to places that need it can take years.
Germany, the continent’s largest economy, still gets 40% of its gas from Russia, even after reducing its dependence. It aims to end Russian coal imports this summer, oil imports by the end of the year and be largely independent of gas by 2024, Economy Minister Robert Habeck said.
[Credit: AP]
What are the alternatives for the EU to get gas?
It is working to phase out Russian gas as quickly as possible by finding new sources, conserving and accelerating wind and solar power. The EU’s plan is to reduce the use of Russian gas by two-thirds by the end of the year and come out well before 2030. As well as getting LNG from places like the US and Qatar, Europe is pushing for more gas from non-Russian pipelines from Norway and Algeria. .
Oil is different in that it comes mainly by ship. Still, it would not be easy to replace Russian supply with tight global markets. Removing the more than 2 million barrels a day from Russia to Europe from the market would drive up oil prices around the world. And Russia might try to sell the oil to India and China, although it might earn less.
What will happen if the EU bans Russian gas?
Estimates vary, but a cut means a major blow to the European economy. A ban could mean governments would have to ration gas between businesses to protect homes and hospitals. Manufacturers of metals, fertilizers, chemicals and glass would be hard hit. Even a partial cut in gas supplies to industry could cost “hundreds of thousands” of jobs, said Michael Vassiliadis, head of Germany’s BCE union representing workers in the chemical and mining industries.
“We will likely continue to see resistance from Germany and a few others, as they are just much more dependent on Russian imports of oil, gas and coal,” said UK senior market analyst Craig Erlam. United, Europe, the Middle East and Africa at currency broker Oanda. “Predictions for the impact of an embargo vary, but it would almost certainly tip the country into recession.”
A group of nine American, British and German economists said an embargo would entail substantial economic costs for Germany, but would be “clearly manageable”. The country “has been through deeper crises in recent years and recovered quickly”, including the 2009 global financial crisis and pandemic recession, they said.
Source: AP
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