As energy crisis looms over Europe, India, China emerge as Russia's new markets

Russia itself has sharply cut flows of natural gas to the EU, indicating this week that they would not resume unless Western sanctions are lifted.

Published: 07th September 2022 11:08 AM  |   Last Updated: 07th September 2022 11:15 AM   |  A+A-

Representational Image. (Photo | AP)

By Associated Press

BERLIN: Russia sent significantly more oil and coal to India and China over the summer compared with the start of the year, while European countries that long relied on Russian energy have cut back sharply in response to the war in Ukraine, said a report published Tuesday.

The Centre for Research on Energy and Clean Air said Russia received about 158 billion euros (USD 158 billion) in revenue for the sale of oil, natural gas and coal from February to August, more than half of which, some 85 billion euros worth, was exported to the European Union.

Within the EU, Germany was the biggest importer, buying 19 billion euros worth of fossil fuels from Russia during the six-month period.

The single biggest importer worldwide, however, was China, which bought 35 billion euros worth of Russian energy, the Helsinki-based group said.

While Russia's revenue rose, overall export volumes dropped by 18% compared with when the country invaded Ukraine, the report said.

The EU has cut its imports from Russia by 35% since the war began, with Russian coal now banned in the 27-nation bloc and a halt to oil sales due to take effect at the end of the year.

Russia itself has sharply cut flows of natural gas to the EU, indicating this week that they would not resume unless Western sanctions are lifted.

Germany's economy minister, Robert Habeck, said Monday that his country doesn't expect gas imports from Russia to resume anymore.

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Foreign Minister Annalena Baerbock acknowledged Tuesday that past purchases of cheap Russian gas had come at the expense of Germany's national security, an argument past governments in Berlin had firmly rejected.

"Until recently, there were spurious technical reasons; now the rulers in the Kremlin are alluding to our sanctions as a whole, which supposedly stand in the way of further gas deliveries," Baerbock said in a speech to German diplomats and business representatives in Berlin.

"We must state this very clearly: We will not succumb to this blackmail."

Meanwhile, India and China imported significantly more coal and crude oil from Russia in July and August than in February and March, according to the report by the Centre for Research on Energy and Clean Air.

The group said fossil fuel exports contributed about 43 billion euros to Russia's federal budget, compared with independent estimates that the war has so far cost the Russian state the equivalent of 100 billion euros.

The European Union's next steps for addressing the continent's worsening energy crisis following Russia's invasion of Ukraine are expected to be unveiled next week, the European commissioner for energy said on Tuesday.

Many European countries have tightened their belts as energy costs soar.

Russia's state-run energy company has continued its shutdown of a pipeline carrying natural gas to Europe, in what German officials see as a political power play, and the European Commission president says the EU's electricity market "is no longer operating" amid knock-on effects from the Ukraine war.

An extraordinary meeting of the European Union's energy ministers will be held in Brussels on Friday to discuss a bloc-wide package of solutions to the power market cost spikes, European Commissioner for Energy Kadri Simson told The Associated Press in an interview.

She said the European Commission expects the package will be adopted next Wednesday, and that a decoupling of gas and energy prices, increase in liquidity for the market and coordinated demand reduction could be expected in it.

That could include a temporary capping of the price of gas used to produce electricity, modification of trading rules on energy exchanges and coordinated demand reduction measures like those seen over the summer.

"We know that there are peak hours where our households and enterprises are witnessing extreme high hourly prices," she said in the interview at the European Delegation office in Jakarta.

"Part of this proposal is also dealing with peak hours and how it will cut demand at these specific timeslots."

European nations have worked to get creative about energy alternatives.

One short-term fix is roughly 20 floating terminals that would receive liquefied natural gas from other countries and convert it into natural gas for homes and businesses.

The plan, with the first floating terminals set to start delivering gas by year's end, has raised alarm among experts who fear the long-term consequences for the environment.

They warn that the terminals would perpetuate Europe's reliance on natural gas, which releases climate-warming methane and carbon dioxide when it's produced, transported and burned.

"Right now, in this situation where Russia is using their natural gas supplies as a weapon, we have to take care to secure the supply. And that means that some extraordinary investments are needed," Simson said when asked about the environmental concerns.

Simson also acknowledged that the global rising cost of gas has pushed some countries to resort to cheaper but more environmentally destructive energy sources.

"We are taking responsibility," she said.

"The biggest step that we are making to not impact the global gas and LNG market is agreeing that we will cut our gas consumption."

The European Union has a binding commitment to cut greenhouse gas emissions by at least 55 per cent by 2030 and to reach net zero greenhouse gas emissions by 2050.

Natural gas has been promoted as a "bridge fuel" because in power plants it produces less carbon dioxide when burned than coal.

But some experts are critical of the move.

"For this winter we have made, and several national governments have made, a set of commitments to reduce energy consumption," Simson said.

"We will not achieve our climate targets unless we will prioritise energy savings."

Simson also said that the current energy crisis in Europe has made it clearer that renewable energy such as solar and wind are essential for energy in the future.

ALSO READ | Russian energy giant Gazprom further cuts gas deliveries to France

"Renewables do not only matter on the climate side, but they also allow us to take the responsibility for our consumption into our own hands," she said.

Simson came to Indonesia to attend a meeting of the Group of 20 leading rich and developing countries in Bali.

EXPLAINER: Europe struggles with crisis as Russia cuts gas

The crisis deepened when Russia's state-owned exporter Gazprom said the main pipeline carrying gas to Germany would stay closed, blaming an oil leak and claiming the problems could not be fixed because of sanctions barring many dealings with Russia.

European officials say it's energy blackmail, aimed at pressuring and dividing the European Union as it supports Ukraine against Russia's invasion.

Here is the latest on Europe's efforts to avoid an energy disaster:


Just about.

The halt in the Nord Stream 1 pipeline means Russian gas shipments have fallen 89 per cent from a year ago.

Russia used to supply 40 per cent of Europe's natural gas, and even more to Germany, where inexpensive energy was a pillar of the economy.

There's still some Russian gas flowing to Europe through a pipeline passing through Ukraine into Slovakia, and another crossing the Black Sea to Turkey and then to EU member Bulgaria.

Russia started cutting back gas as early as last summer before the war in Ukraine started.

That sent gas prices sharply higher.

Then Gazprom cut off a number of European countries after they responded to the outbreak of the war by banning many dealings with Russian banks, businesses and persons.

The reductions have led to soaring natural gas prices, which have hit records in the past few weeks.

Given Russia's slow constriction of supplies since last summer, experts say Europe needs to be ready for zero Russian gas this winter.


High energy prices are already threatening to cause a recession this winter through record inflation, with consumers having less to spend as costs rise for food, fuel and utilities.

A complete cutoff could deal an even heavier blow to an already troubled economy.

Besides heating homes and generating electricity, gas is used to fire a range of industrial processes that most people never think much about, forging steel to go into cars, making glass bottles and pasteurizing milk and cheese.



Electricity prices also have skyrocketed because gas is a key fuel to generate power.

To make matters worse, other sources of power have lagged for reasons not connected to Russia.

Drought has undermined hydroelectric power from rivers and reservoirs.

France's fleet of 56 nuclear power plants is running at half-strength because of shutdowns over corrosion problems in key pipes and repairs, updating and safety checks.

A heat wave limited use of river water for cooling power plants, and lower water levels on Germany's Rhine River reduced supplies of coal to generators.

ALSO READ | Britain to see 80 per cent spike in energy bills as crisis deepens

In a role reversal, France is talking about sending natural gas to Germany, while Germany is exporting electricity to France.

Usually it's the other way around.

Analysts at Rystad Energy say Europe could face a serious electricity shortage as soon as this month.

This winter, a worst case of cold weather, low wind generation and a 15 per cent cut in gas use "would prove very challenging for the European power system, and could lead to power rationing and blackouts."


Europe has lined up all the alternative gas supplies it could: shipments of liquefied natural gas, or LNG, that come by ship from the United States and more pipeline gas from Norway and Azerbaijan.

LNG is much more expensive than pipeline gas, however.

Germany is keeping coal plants in operation that it was going to shutter to reduce greenhouse gas emissions.

It also is keeping the option of reactivating two nuclear plants it's set to shut down.

The 27-nation EU has approved a plan to reduce gas use by 15% by next March, roughly the amount experts say will need to make up for the loss of Russian gas.

Yet those conservation measures are voluntary in member countries for now.

National governments have approved a raft of measures: bailouts for utilities forced to pay exorbitant prices for Russian gas, cash for hard-hit households and tax breaks.


Even as gas sales dwindled, skyrocketing prices helped maintain Russia's income from those sales.

Oil and gas imports were initially exempt from sanctions because Europe was dependent on Russian energy.

Europe has banned Russian coal and will ban most Russian oil at the end of the year.

Russia's revenue from fossil fuel exports reached 158 billion euros from February to August, according to the Helsinki-based Centre for Research on Energy and Clean Air.

But oil has tended to be the Kremlin's main moneymaker, and unlike gas in fixed pipelines to Europe, can be sold worldwide by tanker.

And the gas relationship with Europe may be gone for good, and with it, any influence it might have brought.


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