Thread by @ukraine_world

RUSSIAN GAS AND OIL: why is it so important to ban their imports? UkraineWorld asked Mykhaylo Honchar, a well-known Ukrainian energy expert, President of the Сentre for Global Studies Strategy XXI. Key points of his analysis in our brief, #UkraineWorldAnalysis 1/13

Oil and gas embargo may substantially affect Russia’s ability to fund #UkraineWar, since the Russian budget is dependent on energy exports. In 2021, Russia earned $253,2 billion for energy supplies, while Russia’s military budget amounted to €62,5 billion 2/13

This year, Russia is earning €1 billion per day by selling gas and oil, which is higher than its revenues in previous years 3/13

Russian energy policy is guided not by business logic but by an ambition of geopolitic supremacy. Russia may halt gas transit through Ukraine, causing a significant leap in gas price, to put pressure on Europe in response to its intention to impose a gas and oil embargo 4/13

There is some doubt whether the EU will manage to reduce its demand for Russian gas by 100 billion cubic meters before the end of the year, as declared by the The REPowerEU plan, outlined by the European Commision 5/13

The REPowerEU plan subordinates the reduction of the Russian gas consumption to the long term climate goals, which may delay the process for years. While Russia’s war of aggression must be deprived of its export revenues from oil and gas as soon as possible 6/13

Even if EU’s imports of Russian gas will be reduced this year, it will not significantly affect Russia’s energy revenues because of the increased gas price. European institutions have to resolve this issue without delay, probably within the seventh package of sanctions 7/13

One of the fastest ways to reduce Russian gas consumption is to decrease thermal acceptability by 2 Celsius degrees. According to the International Energy Agency, it will reduce the EU’s demand for Russian gas by 28 billion cubic meters 8/13

Another way is to set a fixed price for Russian gas. This would prevent price escalation arising from market distorting policy by Russian Gazprom, which is the only supplier at the European gas market 9/13

Besides, the EU should diversify gas supply sources with special focus on the liquified gas import. For this purpose, the EU and the USA reinvigorated the transatlantic energy partnership at the EU-U.S. Energy Council on February 7 10/13

Russia can not fully refocus on the Chinese energy market, since its oil and gas infrastructure is much stronger linked to Europe than to #China. The capacity of ESPO and Power of Siberia pipelines leading to China is significantly inferior to the infrastructure in Europe 11/13

Russia is not able to manipulate the market in #China as it does in Europe – China has a diversified system of oil and gas supply, which makes it relatively independent of any particular supplier 12/13

Russia is planning to connect its Western and Eastern oil and gas systems by the Power of Siberia pipeline to expand its collaboration with China. It will take years and tens of billions of dollars. Still, it will not be on par with the capacity of infrastructure in Europe 13/13