RELYING ON RUSSIA

Russia’s invasion of Ukraine has highlighted the dependence of some countries, particularly those in the EU, on imports of oil and gas from Russia. Of the roughly five million barrels of crude oil that Russia exports each day, more than half goes to Europe, while Russian gas accounts for about 40 per cent of the EU’s natural gas imports. The UK and the USA are less dependent – Russian imports account for eight per cent of total UK oil demand and three per cent of US demand. Russia only provides about five per cent of the UK’s gas supplies; the USA doesn’t import any Russian gas. In the wake of Russia’s invasion of Ukraine, Western countries have announced new restrictions on Russian hydrocarbon imports. The USA has announced a complete ban on Russian oil, gas and coal. The UK says it will phase out Russian oil by the end of the year and the EU is reducing its Russian gas imports by two-thirds. The EU has proposed a plan to make Europe independent from Russian fossil fuels before 2030 – including measures to diversify gas supplies and replace gas in heating and power generation. Russia’s actions have also put approval of the Nord Stream 2 gas pipeline on hold. The pipeline between Russia and Germany, which runs alongside the already operating Nord Stream, was completed last September but doesn’t yet have an operating licence. Germany announced that this would be put on hold following Russia’s formal recognition of two breakaway regions in eastern Ukraine. Transitioning away from Russian energy imports won’t be quick or easy, given the existence of alreadyoperating pipelines, the challenges of ramping up other energy sources, and the difficulty of finding new suppliers (especially for gas). Germany and Italy are particularly vulnerable due to the amount of gas they import. In March, it was reported that Germany was reactivating coalfired power plants amid Russian threats to turn off the gas tap.