President Vladimir Putin said on Thursday that Moscow would work to divert energy exports to the east as Europe seeks to reduce its dependence on them, adding that European nations will not be able to give up Russian gas immediately.
Russia supplies about 40 percent of the EU’s natural gas, and Western sanctions on what Moscow calls its “special military operation” in Ukraine have affected energy exports, complicating the financing and logistics of existing deals.
As the EU discusses whether to impose sanctions on Russian gas and oil and member states seek supplies elsewhere, the Kremlin is building closer ties with China, the world’s largest energy consumer, and other Asian countries.
“So-called partners from hostile countries admit that they will not be able to cope without Russian energy resources, including natural gas, for example,” Putin told a government televised meeting.
“There is no rational replacement [for Russian gas] in Europe now. “
Mr Putin also said that by talking about cutting off energy supplies from Russia, Europe was raising prices and destabilizing the market.
He said Russia, which accounts for about 10 percent of global oil production and about one-fifth of gas, will need new infrastructure to increase energy supplies to Asia.
He ordered the government to present a plan by June 1, including “expanding transport infrastructure to African countries, Latin America [and the] The Asia-Pacific region. ”
He also sought clarity on the possibility of including two pipelines – China-linked Power of Siberia and the Far East Sakhalin-Khabarovsk-Vladivostok – in Russia’s unified gas supply system.
Incorporating these routes into the wider network could allow Russia to theoretically switch gas flows from Europe to Asia and back.
Russia began supplying gas to China via pipelines in late 2019, and in February signed a 30-year contract through a new pipeline yet to be built, with plans to settle sales in euros.
Mr Putin also said the role of national currencies in export deals should increase as Russia plans to switch to rubles in gas payments, mainly to Europe.
Russia has seen a sharp drop in oil production, a key source of revenue, amid difficulties with payments for trade and shipping.
The world’s major trading houses plan to cut purchases of crude oil and fuel from Russian-controlled oil companies as early as May 15, sources said, to avoid violating EU sanctions against Russia.
Mr Putin said the most acute problems in the sector were related to disruptions in energy supply logistics.
Be smart with your money. Get the latest investment ideas delivered straight to your inbox three times a week with the Globe Investor newsletter. Register today.
Add Comment