As the battle in Ukraine rages, an power battle is spreading throughout Europe, with international locations racing to exchange Russian fossil fuels whereas Moscow cuts off fuel provides to some nations and threatens others with the identical.
The European Union vowed on Wednesday to proceed to part out purchases of Russian fuel, assist international locations affected by Russian countermoves and pace up the change to renewable power in response to Russia’s determination to halt fuel flows to Poland and Bulgaria.
Russian power large Gazprom PJSC mentioned it had not acquired cost in rubles for fuel gross sales to Poland and Bulgaria, as required by a brand new decree by President
Vladimir Putin.
EU officers accused Moscow of utilizing power as a political weapon. The speaker of Russia’s State Duma,
Vyacheslav Volodin,
mentioned on Wednesday that Moscow ought to increase the measures in opposition to different nations that it deems unfriendly.
Two months into Russia’s battle on Ukraine, EU international locations are accelerating their efforts to exchange Russian oil and fuel. Steps by Germany and different nationwide governments to modify suppliers at the moment are continuing quickly, threatening to decrease Russia’s hitherto most profitable supply of overseas earnings.
Germany and the EU have confronted a lot criticism in current weeks, together with from Ukrainian President
Volodymyr Zelensky,
for his or her continued purchases of Russian oil and fuel, which assist fund Russia’s price range and its battle effort.
The EU is debating potential sanctions on Russian oil, together with a full however phased-in embargo, however nationwide measures by European international locations are creating new info on the bottom sooner than the negotiations in Brussels.
Germany, Europe’s greatest economic system, mentioned on Tuesday it has all however overcome its have to import oil from Russia, thanks partly to an settlement with Poland over using ports and pipelines. Berlin mentioned that phasing out Russian fuel would take longer however that it’s engaged on it.
For Moscow, the choice to throttle fuel flows to Poland and Bulgaria is a high-risk gamble that might undermine one in every of major helps of Russia’s embattled economic system. Oil and fuel gross sales present round 40% of the Russian authorities’s revenues. The EU is Russia’s major fuel market.
“Gazprom’s announcement is another attempt by Russia to blackmail us with gas,” European Commission President
Ursula von der Leyen
mentioned on Wednesday. She mentioned that Bulgaria and Poland are already receiving fuel from EU neighbors and that discussions are ongoing on methods to stop vital disruptions.
Analysts at power consulting agency Rystad mentioned that “Russia has fired the first shot back at the West,” wielding power as a weapon.
“Russia is trying to shatter the unity of our allies,” Mr. Zelensky’s chief of employees,
Andriy Yermak,
mentioned on Telegram.
The Kremlin on Wednesday denied it was utilizing power as a weapon and mentioned it stays a dependable power provider.
Many European international locations have been scrambling to line up various fuel provides for subsequent winter’s heating season, primarily liquefied pure fuel imported from the U.S. and the Middle East, and fuel piped in from Norway and North Africa. The EU goals to go into subsequent winter with its fuel storage amenities 80% full and to slash its purchases of Russian fuel by two-thirds by the tip of this 12 months.
The European Commission, the EU’s govt arm, is prone to make proposals subsequent week for a sixth spherical of financial sanctions in opposition to Russia for its invasion of Ukraine, together with an embargo on oil or different measures to chop Moscow’s revenues from oil gross sales. Several member states together with Germany and Hungary have to date resisted a full embargo. But European demand for Russian oil is plummeting anyway.
Russia’s state oil firm has had bother discovering consumers for oil in current days. European refineries are already shifting away from Russian crude oil, even with out sanctions.
France’s
TotalEnergies SE
has stopped shopping for Russian crude for its 4 oil refineries in France and Belgium. The firm continues to be shopping for Russian crude below a provide contract for its refinery in Leuna, Germany, however an organization official mentioned the refinery would quickly exchange that with non-Russian oil introduced in from the Polish port metropolis of Gdansk.
Total continues to be shopping for some diesel from Russia below earlier contracts however says it’s going to finish these purchases by the tip of the 12 months because the contracts expire.
Exxon Mobil Corp., which owns six refineries in continental Europe, mentioned it has determined to not signal new contracts for Russian crude oil because the Feb. 24 invasion. The firm was beforehand an enormous purchaser of Russian crude.
European officers mentioned they count on Moscow to chop fuel provides to extra international locations. Before the battle in Ukraine, the EU sourced some 40% of its fuel from Russia.
Latvian Prime Minister
Krišjānis Kariņš
mentioned in an interview that Russia’s strikes are seemingly meant as warnings to the EU to decelerate or cease its preparations for a full embargo on Russian oil.
“The question is who is more resilient?” Mr. Kariņš mentioned, urging his EU colleagues to not be deterred. “The Ukrainians are paying with their lives, we are paying with higher energy prices.”
Further fuel stoppages by Russia would seemingly ship gasoline costs greater, analysts mentioned, placing extra stress on the EU’s slowing economic system and feeding into greater power payments world-wide by prompting a race to seek out fuel on worldwide markets. In the U.S., natural-gas costs have doubled this 12 months, partly as a result of producers of LNG are transport it to Europe at breakneck pace.
Natural-gas costs in Europe are at present under their peak in March however effectively above their ranges a 12 months in the past and stay a key supply of inflationary stress in European economies. Benchmark costs jumped 11% on Wednesday.
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Mr. Putin demanded final month that international locations deemed hostile to Moscow, together with EU members, pay for fuel in rubles. Gas contracts are normally denominated in {dollars} or euros. A subsequent Kremlin decree tweaked the order: Customers needed to pay in euros or {dollars} to Russia’s Gazprombank, which might convert the cash into rubles and ship them on to Gazprom itself. The EU has mentioned its sanctions don’t stop firms from doing that.
Some European officers mentioned Russia’s transfer in opposition to Poland and Bulgaria was seemingly not about cost modalities however was a warning geared toward all EU members which can be sending weapons to Ukraine.
Germany on Tuesday introduced that it will ship antiaircraft cannon tanks to Ukraine, ditching its earlier reluctance to ship heavy weapons and becoming a member of a rising variety of international locations, led by the U.S., which can be arming Ukraine’s defenders with artillery, armored automobiles and different highly effective weaponry.
Russia’s fuel stoppage may have restricted impact on Poland, which was already set to change into impartial of Russian fuel by the tip of this 12 months. Still, Poland was because of obtain at the very least an extra 5 billion cubic meters in fuel from Gazprom which seemingly received’t be delivered and can have to be changed this summer season, mentioned
James Huckstepp,
European fuel analyst at S&P Global Commodity Insights. Most of the fuel will likely be pumped throughout the border from Germany, he added.
The stoppage is an even bigger drawback for Bulgaria, which will get greater than three quarters of its fuel from Russia and has few fast or straightforward choices to exchange it. A brand new pipeline from Greece to Bulgaria to ship fuel from Azerbaijan has confronted lengthy delays and has but to be accomplished, mentioned
Tom Marzec-Manser,
head of fuel analytics at ICIS. Using advanced swap preparations, Bulgaria may exchange a few of its Russian fuel via an present pipe to Greece, he mentioned.
Bulgaria’s power minister
Alexander Nikolov
mentioned on Wednesday that the nation has sufficient fuel in storage for the approaching month and is on the lookout for various deliveries.
“Because all trade and legal obligations are being observed, it is clear that at the moment the natural gas is being used more as a political and economic weapon in the current war,” Mr. Nikolov mentioned.
Bulgaria’s ruling coalition has been break up on the problem of sending weapons to Ukraine. A delegation led by Bulgaria’s prime minister,
Kiril Petkov,
is headed to Kyiv this week.
In Berlin, the federal government of Chancellor
Olaf Scholz
is accelerating investments in renewable power and constructing LNG terminals. In the occasion of a full shutdown of Russian fuel inflows, Germany would want to ration power and droop some industrial exercise, in accordance with analysts. The nation’s main financial assume tanks mentioned in a report earlier in April that Germany would enter a pointy recession if Russian power deliveries are fully minimize off.
Russia’s transfer in opposition to Poland and Bulgaria is being watched carefully in Italy, the second-largest purchaser of Russian fuel after Germany. Italy has already began to wean itself off Russian fuel: the nation’s imports to date in April are about half the extent of the identical month final 12 months.
Italian Prime Minister
Mario Draghi
and his overseas minister have crisscrossed Africa prior to now month searching for offers to extend fuel provides from international locations together with Algeria, Mozambique and Angola.
Moscow has lengthy used fuel as a method to obtain its geopolitical goals. Last fall, Russia withheld deliveries to Europe from the short-term fuel spot market regardless of a worldwide scarcity. It additionally stored the extent of storage websites it managed throughout the continent at low ranges, serving to to push costs to file highs. European lawmakers known as for a probe into Russia’s manipulation of the market. Mr. Putin on the time dismissed criticism of the Kremlin’s power techniques as “politically motivated blather.”
—Laurence Norman, Eric Sylvers and Anna Hirtenstein contributed to this text.
Write to Georgi Kantchev at [email protected] and Joe Wallace at [email protected]
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