Will the new offensive led by the army in Donbass yesterday influence Western law firms about a possible embargo on Russian oil? While no measures have been taken to restrict European imports of the black gold produced in Moscow for the time being, Economics Minister Bruno Le Maire seems to be changing his position. “It is more necessary than ever” to halt European imports of Russian oil, Bruno Le Maire reiterated on Europe 1 on Tuesday.
“We have always said that we want a coal embargo, it’s done, and an embargo on Russian oil,” argued the economy and finance minister. “If you see what is happening in Donbass (…), I am sure that the reality of the situation in Ukraine will shift the lines. If, like us, we cling to the freedom and protection of the Ukrainian people, it must go to the end of its arguments and not finance the war” by buying oil from Russia, he explained.
$27 billion in hydrocarbons Europe bought from Russia
But since the war in Ukraine began in late February, the Kremlin has taken in $27.3 billion from EU oil, gas and coal purchases, according to Velina Tchakarova, director of the Austrian Institute for European and Security Policy (AIES).
Bruno Le Maire “hopes” to convince Europeans “in the coming weeks that we must stop importing oil from Russia,” he underlined on Tuesday. “Stopping oil imports from Russia hurts the financing of the war in Ukraine,” he continued. What is the first source of foreign exchange for Vladimir Putin’s power for several years? It’s not gas, it’s oil,” the minister assured. Nonetheless, Europe is still largely dependent on Russian oil.
A differentiated calendar
The researcher Francis Perrin, research director at IRIS (Paris) and associate researcher at the Policy Center for the New South (Rabat), recalls the energy balances between these two powers.
The European Union (EU) is not a big fossil fuel producing area. In 2020-2021, 45% of its gas imports, 47% of coal imports and 25-30% of oil imports came from Russia. This is why European leaders are not looking to embargo these imports immediately or in the short term, as there would be no alternative solution,” he estimated in the La Tribune columns.
Hence the EU’s decision to act in two different timeframes. In a year we will significantly reduce our imports of Russian gas without eliminating them, and in five years the goal is to completely eliminate oil and Russian gas.
Months to turn off the taps
A potential halt to black gold imports from Russia could take “months,” several European sources warned on Friday. The adoption of measures on oil requires the reversal of existing contracts, the search for alternatives and the avoidance of circumventing them. This will not happen overnight. It will take at least several months, said a European official involved in the discussions.
Westerners must make a real policy choice in the face of Russia, one that will not be without consequences, especially as OECD countries’ strategic oil stocks have fallen to their lowest level since 2018. They represent 91 days of consumption.
The EU decided on April 8 to halt its coal purchases from Russia, an embargo that will come into effect in early August, 120 days after the new sanctions package was published in the EU Official Journal.
Last week the EU said it was considering sanctions against Russian oil more seriously. The President of the European Commission added that she was developing “smart mechanisms” to ensure that oil was also included in the new sanctions. “Putin should not be able to charge even higher prices for reserves that would normally be destined for the EU in other markets,” said Ursula von der Leyen. “The priority is to reduce Putin’s income,” she added.
Russia turns to other importers
Vladimir Poutine responds while saying he’s thinking about where to redirect his exports to. “We expect that supplies to the west will decrease in the future,” the Russian president said last week. We must therefore “refocus our exports to the fast-growing markets in the south and east,” he said on Thursday April 14, during a government meeting dedicated to the energy sector in the context of international sanctions.
Opportunities, options and alternatives are opening up for us. As for Russian oil, gas and coal, we will be able to increase their consumption on the domestic market (…) and increase the supply of energy resources to other regions of the world that really need them,” he said already declared the day before Vladimir Putin.
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The Russian President believes that European talk “destabilizes the market and drives up prices”. Nevertheless, he wants to be confident: “Of course, this causes us difficulties, but we have the resources and the possibilities to quickly find alternative solutions,” he said. But for several experts, such as Françis Perrin, “Russia should not delude itself too much about the possibility of replacing its exports to Europe with China and India,” he explained to La Grandstand.
Last month, the International Energy Agency (IEA) estimated that sanctions against Russia could cause a “shock” in world oil supplies. But OECD countries fear a rise in crude oil prices at a time when inflation is already at levels not seen in decades.
latribune.fr
Apr 19, 2022 10:54 am