Oil and gas for Asia – but how?: Russia lacks pipelines, tankers and LNG terminals

The flow of fossil fuels from Russia to Europe is almost exhausted. In fact, Moscow is losing a lot of money. Because the Kremlin has a great solution: it wants to sell oil and gas to Asia. However, there is a lack of European practical experience and the necessary infrastructure.

On December 5, after more than nine months of war, it happens European oil embargo valid Then it is no longer possible to transport Russian oil to Europe by sea. In this way, perhaps the most – 90 percent – transported The decoupling is also visible in natural gas, even without the embargo: EU countries currently receive gas only through Russian pipelines one fifth of the gas volumewhich he purchased more than a year ago.

This is a huge problem for Russian state finances because you lose your biggest customer. Since the beginning of the war, Russia has had about oil and gas 234 billion euros sold, according to the Center for Energy and Clean Air Research (CREA). About half of the money came from Europe.

I Russian budget for 2023 so it should a three-digit billion gap to stare However, Moscow’s Finance Ministry assumes that revenues from the oil and gas business will fall by only 6 percent. Because the Kremlin has a simple solution to its problem: Asia will replace Europe as its main customer. But economists and Russian experts cannot explain exactly how it should work.

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But so far, the change appears to have been a complete success. In mid-November, Russian oil supplies to Western Europe were already decreasing 90 percent less than before the war. Recently, 95,000 barrels of crude oil per day arrived in Rotterdam, the financial portal Bloomberg reported. At the beginning of February, it was still more than 1.2 million. barrels per day. Most often have this failure China, India and Turkey more than compensated by filling their warehouses with deeply discounted Russian oil, which at the same time is still expensive enough to fill the Kremlin’s coffers.

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However, along with the embargo, the EU and the US will introduce a ceiling on Russian oil prices in December. It is not yet clear where it is. the last ones were $60 per barrel as the upper limit of the conversation. Economists predict that sales to the Russian household will be profitable only above this price.

In fact, new buyers should be happy about this, as they are theoretically guaranteed to get cheap prices. However, like the EU, China, India and Turkey are the main buyers of oil the sea, where the EU has two more levers in its hands: Russian oil has so far been transported primarily by tankers from Greece, Malta and Cyprus, which are insured in Great Britain, Norway and Sweden – and must adhere to the price limit, otherwise there is no insurance. They are essential for ship owners as they cover not only damage to the ship and cargo but also oil spills. From December, new supplies will only be possible if Russia has enough of its own tankers, maybe even a shadow fleet with other insurers.

“What can Asian countries really lose?”

Moscow’s situation is even more complicated when it comes to natural gas, although it is rarely supplied by ship. Here, too, the biggest customer is or was Europe: in 2021 70 percent Russian gas exports are sent by pipeline to the EU, as are half of Russia’s LNG exports. For the Kremlin, the solution is clear: natural gas must be like oil will focus primarily on China in the future will However, the necessary infrastructure is lacking.

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“What do Asian countries really have to lose?” asks political scientist Alexander Libman of the Freie Universität Berlin on the NTTV podcast I Learned Again. “Europe will import less, but it buys the international market. So Asian countries need alternatives. If Russia is ready, great, but how should Russia supply gas without pipelines?”

55 billion euros per flop

To the west is Russia more than 50 years and has developed an extensive pipe network with a wealth of European know-how. In Germany alone, with Nord Stream 1 and 2, Jamal and Transgas, four pipelines are coming to an end – in China, so far, only one: in 2019, approximately 55 billion.

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