Last year, despite a series of harsh sanctions against Russian President Vladimir Putin and continuous tough talks about him, Europe was unable to break its dependency on Russian oil.
The European Union (EU) spent $23 billion on Russian oil and gas in the third year of the war on Ukraine, more than the $19.6 billion in financial aid it offered to the war-ravaged nation last year, according to the Center for Research on Energy and Clean Air.
Russia has also strengthened its grip on the non-EU market – China bought $82 billion of Russian fuel, India purchased $51 billion, and Turkey purchased $36 billion.
Last year, Russia exported fossil fuels worth $254 billion. This is a drop of 3% from the year before.
Russian oil exports have fallen by only 8% since the Ukraine invasion, despite Western sanctions on Russian crude and refined products. Since February 20, 2022, the Kremlin has made almost $1 trillion in oil sales.
The “shadow fleet” of 585 tankers was used by Russia to conceal the origin of many of its products. Russia buys aging ships, often reflags them, and employs shell companies to conceal their Russian origins.
Russia exports its oil to third-party states that do not have sanctions against Moscow. They then sell the oil to Western countries.
CREA’s analysis found that tighter sanctions could slash Kremlin revenues by as much as 20%.
The EU has adopted its 16th set of sanctions against Russia to combat the shadow fleets.
Jonathan Bass, the founder of Argent LNG, says that buying fuel in Russia is still cheaper than elsewhere.
Even with geopolitical risks, European gas buyers find Russian pipeline cheaper than LNG.
Bass says that the Biden Administration’s ban on LNG exports is a major reason for Europe’s dependence on Russian fuel. In a first-day executive order, President Donald Trump ended the pause.
Bass stated that after the invasion, “Europeans said, okay, we are going to rely on American Liquefied Natural Gas’ but then Biden stopped it… This made Europeans fearful of depending on America’s swings in politics.”
It has proven difficult to cut off Russian gas for European countries like Austria that are landlocked and rely on pipelines as a fuel source. The flow of a pipeline that fueled Russia through Ukraine and Slovakia ceased at the start of this year.
The re-gasification infrastructure and the distribution system are not optimized to import from other countries. Bass stated that they rely heavily on Russian pipelines.
Then-President Joe Biden imposed in January the most severe sanctions yet against Russia’s petroleum industry. He targeted 161 Kremlin-linked tankers.
Last week, European Leaders issued a united display of Support for Ukrainian President Volodymyr Zelenskyy following his spat in the Oval Office with Trump that caused an abrupt stop to peace negotiations.
On Sunday, European leaders met in London for emergency talks to assume control of the peace process while Trump and Zelenskyy are at odds.
Bass said that oil and gas companies are asking the Trump Administration to give them direction on the importance of U.S. Exports to reduce the dependence of the world on Russian Fuel.
The President has to do more than just say ‘drill, baby drill. He said it, but then he went to Russia.
He continued, “We need to have assurances of the direction of the business and the supply that the government wants for us to follow in the LNG gas industry. Don’t make us look like Biden. We will find alternative markets if you insist on supplying them from Russia. We don’t want to see more flip-flopping. Biden started the whole Russia- Ukraine conflict when he stopped relying on American energy.”
