China, Germany and Italy are Russia’s largest energy customers. Although the EU actually no longer wants to import oil and gas because of the Ukraine war, one country has even increased its imports.
In many states, people are moaning about high gas prices. In the USA, where fuel costs are traditionally very low, the price of a gallon of gas (almost 3.8 liters) has risen above the psychologically important five dollar mark for the first time, which is currently 4.77 euros and corresponds to around 1.26 euros per liter. Two years ago, in some places, you could buy a gallon for less than two dollars, or about 50 cents per liter. In Germany, petrol prices are stagnating at a high level of around two euros, despite the “tank discount” introduced by the federal government. Without it, according to the petroleum industry, even more money would have to be paid per liter.
The beneficiary of the high prices is Russia of all places. According to an analysis, the state that invaded Ukraine three months ago made 93 billion euros in revenues from fossil fuel exports in the first hundred days of the war. According to the recently published report by the Finland-based Center for Research on Energy and clean Air (CREA), the EU is still by far the largest buyer of Russian gas and oil.
China overtakes Germany
The EU accounted for 61 percent of Russia’s fossil exports between February 24 and June 3, according to CREA. This corresponds to 57 billion euros. Among the individual countries, China was the most important customer with 12.6 billion euros, followed by Germany with 12.1 billion and Italy with 7.8 billion euros.
While oil consumption continues to rise worldwide, it has recently fallen in Germany – partly because of the corona pandemic. In 2020, 96.2 million tons were consumed, the year before and ten million tons more.
Russian gas unaffected by embargo
Russia’s revenues come primarily from the sale of crude oil at €46 billion, followed by gas in pipelines at €24 billion. The rest of the revenue comes from the sale of petroleum products, liquefied natural gas (LNG) and eventually coal.
The European Union recently decided on a gradual embargo – with exceptions – for its oil imports from Russia. However, Russian gas, on which the economic bloc is heavily dependent, has not been affected so far. Although imports fell in May and Russia has been forced to sell its mineral resources on the international markets at bargain prices, the Kremlin is benefiting from skyrocketing energy prices around the world.
France increases purchases
While some countries like Poland, Finland and the Baltic states have reduced imports since the war began, others like China, India and EU member France have increased purchases. “While the EU is considering tougher sanctions against Russia, France has increased its imports, becoming the world’s largest buyer of Russian LNG,” said CREA analyst Lauri Myllyvirta.
The expert said that the imports are spot deals, not long-term supply contracts. This means that despite the invasion of Ukraine, France made a conscious decision to use Russian energy. “France must balance its actions with its words,” urged Myllyvirta. “If it really supports Ukraine, it must immediately implement an embargo on Russian fossil fuels and quickly develop clean energy and energy efficiency solutions.”
Moscow expects a full plus
At the end of May, Moscow quantified its additional income from the internationally high energy prices for the first time: it expects an additional 13.7 billion euros from oil and gas exports this year, said Russian Finance Minister Anton Siluanov. The government wants to spend the money rather than put it aside. According to the Minister of Finance, it should be spent on “additional payments” for pensioners and families with children and for the “special operation” in Ukraine.