The European Union needs to stop all oil and gas imports from Russia to prevent indirectly funding Russia’s war in Ukraine, 25 NGOs, including the National Ecological Center of Ukraine, told the EU on Thursday (3 March).
“Russia continues to receive payments from European governments that inadvertently fund Russia’s assault on Ukraine. That must end,” said Heorhiy Veremiychyk of the Ukrainian NGO.
“Russian missiles and bombs are killing hundreds of Ukrainian defenders and civilians. This will only get worse. We need urgent action to cripple the Putin regime’s ability to fund the war,” he added.
The European Union imported an average of over 380 million cubic metres of pipeline gas per day from Russia in 2021 – around 140 billion cubic metres (bcm) for the year as a whole – according to the International Energy Agency (IEA).
And Europe is still importing Russian oil, gas, and coal. Thanks to the skyrocketing prices, this means Europe is sending Moscow millions of euros per day even as its army moves through Ukraine.
“[Today] Europe will pay Russia €600 million for natural gas and €350 million for oil, i.e. around €1 billion in just one day,” Simone Tagliapietra, a senior fellow at the think tank Bruegel, wrote on Twitter on Thursday.
“Every day the EU sends €800 million to Russia to get oil and gas. As this is also used to fund the war, the EU might soon need to face this and act,” he warned a day earlier.
In this context, the 25 NGOs are demanding that the EU and UK introduce a tariff on Russian fossil fuel exports and then put an embargo on these.
“The rockets destroying Ukrainian cities are bought with the petrol in European cars. For 20 years we’ve been paying blood money to Putin. Ending our oil addiction is not just a moral imperative to address climate change, it is crucial to ending this war,” said William Todts, executive director at the NGO Transport & Environment.
The country of origin should also be made obvious to consumers at petrol stations, the NGOs added. They also call on the EU and the UK to reduce their oil consumption, instead of moving from Russian sources to Middle Eastern supplies, and to increase support for electric vehicles and renewable energy.
EU split over energy sanctions
Russia’s export revenues totalled €24 billion in 2019, according to the European Commission.
“In many respects, Russia is a petrostate. That means that a large amount of its income is based on energy – about 40% of the budget comes from oil and gas,” said Nick Sitter, a professor of public policy at the Central European University in a video explaining the situation.
But so far, very few EU sanctions have been targeted at Russia’s energy sector. The EU has prohibited the sale, supply and transfer or export to Russia of goods and technologies for oil refining, but nothing more.
For instance, there have been no sanctions on the export of gas, oil or coal.
Alongside this, the energy sector has, so far, not been impacted by financial sanctions like the SWIFT ban. Russia’s largest banks, Sberbank and Gazprombank, have been left out of this sanction because they are important for energy payments.
Within the EU, different countries want different levels of sanctions when it comes to Russia’s energy sector.
For instance, the Polish prime minister proposed sanctions to EU leaders on 24 February that included imports of Russian coal, Reuters reported.
Meanwhile, Germany is adamantly against sanctions on Russian fossil fuel imports, with Berlin saying this would endanger “social peace” in Germany due to the country’s high dependency on Russian gas imports.
“I would not advocate an embargo on Russian imports of fossil fuels. In fact, I would oppose it because we would endanger social peace in the federal republic,” German Economy Minister Robert Habeck of the Green party told a press conference on Thursday
While Germany is looking to diversify its energy supply and has recently announced a plan to build two LNG terminals, it is still heavily dependent on Russian gas. Around 55% of all German gas imports come from Russia, compared to 40% across the European Union.
The German government is looking to lower this dependency but it “can, of course, not be completely changed in a few days or three months. That is why we need and will keep open the possibility of energy supplies from Russia,” Habeck said.
Meanwhile, the chief spokesperson on energy for the conservative European People’s Party in the European Parliament, Andrius Kubilius, has called for a full embargo on energy imports from Russia.
“My opinion is very clear. We need to introduce a full embargo to energy imports from Russia immediately,” said Kubilius, who is the former Prime Minister of Lithuania. “We need to see about diminishing our dependency on Russian gas imports,” he added.
The road out of Russian energy
Europe is scrambling to reduce its reliance on Russian energy, particularly gas. Over the course of this year, it has been trying to increase its supply of liquified natural gas (LNG), whose imports hit a record high in January.
A leak seen by EURACTIV showed that the European Commission is continuing its efforts to reduce its dependency on Russian gas by increasing LNG imports and renewables and turning to alternative gases, like biogas and hydrogen.
On Thursday (3 March), the IEA put forward a 10 point plan for Europe to exit Russian gas. If Europe were to take these additional steps, near-term Russian gas imports could be reduced by more than 80 bcm or well over half, they said.
But both Russia and Europe would be impacted by a cut off of the gas supply, whether caused by Russia stopping the export to Europe or European sanctions preventing imports.
Russia is vulnerable to the impact of this in the medium to long term, according to professor Sitter, who said the very high oil prices will be enough to keep the Russian government afloat even if there is a gas cut off.
However, beyond this, Sitter argued that Russia cannot replace the EU as a customer because China will not import as much as Europe currently does.
In the short term, though, the EU will be more impacted by a cut off of Russian gas, and by higher gas prices.
“This will hit consumers, this will hit industry, and it may of course lead to political protests. That might be a problem for European leaders seeking re-election,” Sitter explained.
However, he said, the 150bcm that Europe imports from Russia can be replaced. It would be hard to get more from Norway, but Europe can use storage to make it through March and April and start looking at LNG contracts for next winter.
[Edited by Zoran Radosavljevic]