Putin

Putin

Western Europe has finally freed itself from direct imports of Russian oil, dealing a blow to Vladimir Putin, research by European energy consultancy Rystad suggests.

Analysts found that the United Kingdom and much of Europe have reversed a years-long increase in dependence on Russian oil and gas before the Ukraine conflict, switching instead to other suppliers such as the United States and Canada.

Jorge León, senior vice president of oil markets at Rystad, said: “I think people underestimated how flexible the energy system is.

“Just before the war, the very idea that we would stop buying oil and gas directly from Russia would have been crazy. But to a large extent it has happened.”

According to Eurostat, in 2020 imports from Russia represented 39% of the gas used in the European Union, 23% of oil imports and 46% of coal imports.

The United Kingdom depended on Russia for about 30 percent of its diesel, 27 percent of its coal and up to 10 percent of its gas, which arrived partly by ship as liquefied natural gas (LNG) and partly by through trans-European gas pipelines.

According to official figures, this figure has practically fallen to zero.

Quantities of Russian fossil fuel are still believed to have arrived through refineries in other countries, although Mr León – who will speak at International Energy Week in London this week – said total quantities continue to decline.

León said the key to breaking Russian dominance had been an increase in supply from other sources that were also outside OPEC, the cartel formed mainly by Middle Eastern countries to control supply and prices.

He said: “Non-OPEC supplies don’t usually grow that much, but 2023 was a huge year.”

“The stars aligned and new projects arrived from Brazil, Argentina, Canada, Norway, etc. So that saved us in a sense.

“And if you look at the United States, growth has continued very, very strongly through 2023.”

The economic crisis that affected the United Kingdom and Europe from 2022 also played a role, decreasing overall energy demand.

León said: “Demand in the OECD (a group of rich developed countries) actually declined last year and probably in 2024. So in a sense, we were lucky that our economic growth in 2023 was lower.”

However, cutting off supplies to Russia has proven to be a slow task. León warned that some of the apparent decline in trade with Russia could be illusory, because the Kremlin was selling more crude oil to countries like India.

There it could be processed into products such as diesel that could be sold in the UK and Europe.

He said: “Oil that initially flowed from Russia to Europe now goes to China and India, from where suppliers ship to Europe.”

The Energy and Clean Air Research Centre, which tracks Russian energy exports by value and destination, estimates that Russia has earned €605bn (£517bn) from fossil fuel exports since February 2022, when invaded Ukraine. Around €188 billion of that money came directly from EU countries.

Ashley Kelty, head of oil and gas research at investment bank Panmure Gordon, said the UK had stopped direct oil imports from Russia, but the reality was more complex.

He said: “The UK was dependent on Russia for diesel fuel – 30% came from Russia before the sanctions. This has been replaced by Russian diesel refined in India and China, and therefore outside sanctions.

“The EU was highly dependent on Russian gas: around 40 percent of all gas used came from Russia. This has been replaced by US LNG and demand destruction through two mild winters and the collapse of German industrial demand.

“So dependence on Russia has largely been broken, but they still remain important for global supply, with China and India buying much of their products now, albeit at deep discounts. “If they were forced to exclude Russia, there would be another energy crisis with huge shortfalls in crude oil and LNG supplies.”

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By Sam