Page 41 - RusRPTJul22

The EU is making a concerted push to sever energy ties with Russia over its actions in Ukraine, having already introduced a ban on coal imports from the country and agreed an embargo of up to 90% of oil supplies by the end of the year. While reluctant to take similar steps regarding Russian gas, the European Commission is calling for member states to make drastic cuts to gas use and increase imports from alternative suppliers under the REpowerEU plan, which it says could result in a two-thirds reduction in Russian gas deliveries to the bloc by year-end.
However, the report by CREA starkly indicates how much money the EU continues to hand over to Moscow in return for fulfilling its energy needs. Out of the total of €93bn ($97bn) that the country earned on fossil fuel exports, the EU accounted for €57bn, or 61%. The bloc contributed 85% of Russia’s revenues from pipeline gas exports, 75% of its revenues from oil product sales, 75% from LNG, 50% from crude oil and 30% from coal.
Russian energy imports were significantly affected in May by disruptions and heavy discounts to its crude oil exports, as well as a cut in gas supply volumes, following Gazprom’s decision to cut off supply to nine buyers in Bulgaria, Denmark, Finland, Germany, the Netherlands and Poland. Those countries had refused to comply with a Kremlin decree that required them to make their euro and US dollar-denominated payments to accounts set up at Gazprombank, to be converted into rubles before transfer to Gazprom.
Nevertheless, Russian hydrocarbon export revenues rose by nearly 40% y/y in May to €883mn in May. This was €43mn more than Russia is estimated to be spending on its war in Ukraine.
The reduction in volumes shaved €95mn off Russia’s daily receipts, and the discount on Russian oil wiped off a further €95mn. But these factors were more than offset by the €443mn growth in receipts that resulted from higher hydrocarbon prices. Revenues were down from an average of €1.1bn per day in January and February, although seasonality was a major cause of this decline.
On a country-by-country basis, the largest dents to Russia’s revenue stream were made by Poland and the US. Percentage-wise, sharp reductions were also achieved by Lithuania, Finland and Estonia.
Other buyers step up China notably replaced Germany as the biggest buyer of Russian hydrocarbons during the 100-day period, importing a total of €12.6bn. While Chinese purchases have remained at a relatively constant level during the war, Germany was able to make a 25% reduction in its crude imports from Russia.
China, India, France, the UAE and Saudi Arabia also took advantage of the discount on Russian oil and expanded purchases. India emerged as a significant buyer, accounting for 18% of the country’s crude exports. The largest buyer was the Jamnagar refinery, which
41 RUSSIA Country Report October 2020 www.intellinews.com