Fri. Mar 1st, 2024

Prof. ST Hsieh

Director, US-China Energy Industry Forum


[email protected]

April 25, 2022

The Ukraine war entered the third month today, with no cease fire in sight. Secretary Blinken and Secretary Austin made a “secret visit” to Kiev and met with Zellensky. Their trip had to be “secret” because Ukraine is in war with Russia, they entered the war zone. Blinken and Austin offered hundred millions of dollars heavy military equipment along with cash so that Zlellensky can keep his shop open for businesses. But Secretary Austin clarified that the US goal now is to weaken Russia or Putin. In a way what the US is doing to Russia is essentially the same as Putin invaded Ukraine. Thus, US will be calling the shots when the war will end!

The Ukraine war is deeply rooted on EU’s energy security, but there is no way that EU can instantly cutoff Russian energy.

Numbers tell the true story: “Gas and oil are flowing to Europe even as governments denounce the war. The EU sends $450 million a day to Russia for oil and $400 million per day for natural gas, according to calculations by analysts at the Bruegel think tank in Brussels.” So, EU is paying $850 millions per day to Putin so that Putin can keep his military actions in Ukraine. In addition, US and EU are providing hundreds of millions of military equipment to Ukraine defending against Russia. It does not look like a great deal.

Now, Zellensky is calling the EU to immediately cutoff Russian energy. “For us, every drop of Russian oil is Blood Oil. For the UK to really stand alongside Ukrainians, we need to see a total – and immediate – boycott on Russian fossil fuels.” This request makes head-strong folks shout in Unisom. But how Ukraine can ask all regular people in EU for sacrifice, for how long, why? On the other hand, Ukraine is suffering badly by the war. Should Zellensky work on a cease fire deal so his people can take a fresh start and rebuild their homelands?

Further, the world today is based on free trade: everyone is looking for the best deal! If India or any other non-waring party goes to the open market and gets a good deal, is there any thing wrong?

Borrell says no EU agreement on Russian energy embargo

Sun, April 24, 2022, 8:10 PM

BERLIN (Reuters) – There is insufficient support from European Union member states for a complete embargo or punitive tariff on Russian oil and gas imports, the EU’s top diplomat Josep Borrell was quoted as saying by German newspaper Die Welt on Monday.

“At the moment, we in the EU do not have a unified position on this question,” Borrell told the newspaper.

Oil exports are the Kremlin’s main source of foreign currency and many within the EU have called for an end to oil payments because they effectively finance the war in Ukraine, which Russia calls a “special military operation”.

Some EU countries are pushing for a sixth sanctions package on Russia and Brussels is preparing a full impact assessment of an oil ban as part of possible further measures.

Russia is Europe’s biggest oil supplier, providing just over a quarter of EU oil imports in 2020, according to data from the bloc’s statistics office Eurostat.

Borrell said the topic will be discussed at the next EU summit due at the end of next month and that he did not expect any decision on the matter before then.

“A final proposal for an embargo on oil and gas is not yet on the table,” he said.

The EU Commission will probably make proposals for a sixth package of sanctions to the member states this week, Die Welt said, without citing sources.

All EU states are working to cut their dependency on Russian oil and gas, Borrell said, adding that he believed the bloc will be able to reduce its dependency eventually.

“At some point it will happen and then Russia will feel painfully that the revenues from the oil and gas business are being lost,” he added.

(Reporting by Riham Alkousaa; Editing by Emelia Sithole-Matarise)

EXPLAINER: What’s the impact if Europe cuts off Russian oil?

The Associated Press

Thu, April 21, 2022, 4:11 AM

Europe is struggling to find ways to stop paying Russia $850 million a day for energy and hit the Kremlin’s finances over its invasion of Ukraine.

The 27-member European Union is finding that reversing decades of dependence on Russian oil and natural gas is not a simple matter.

Leaders are now discussing sanctions on Russian oil, including a possible boycott. Here is what such a move could mean for people in Europe and the rest of the world:


Gas and oil are flowing to Europe even as governments denounce the war. The EU sends $450 million a day to Russia for oil and $400 million per day for natural gas, according to calculations by analysts at the Bruegel think tank in Brussels.

That means energy revenue is bolstering the Kremlin’s budget, adding to foreign currency reserves even as Western sanctions have targeted Russia’s reserves abroad. The Russian government got an average of 43% of its revenue from oil and gas between 2011 and 2020.


Europe is the biggest purchaser of Russian crude, receiving 138 million tons in 2020 out of Russia’s total exports of 260 million tons — or 53%, according to the BP Statistical Review of World Energy. Europe, which imports almost all of its crude, gets a quarter of its needs from Russia.

Oil is refined into fuel for heating and driving as well as being a raw material for industry.


It’s harder to find alternative sources of natural gas because it comes mainly by pipeline. It would be easier to find other sources for oil, which mostly moves by tanker and is traded globally.

Natural gas is off the table for now. Heavy users like Germany say an immediate cutoff could cost jobs, with industrial associations warning of shutdowns in glass and metals businesses.

Cutting off both natural gas and oil would likely cause a recession in Europe, economists say. European governments agreed to stop Russian coal imports starting in August, but that’s a relatively small part of energy payments to Russia.


Europe imported 3.8 million barrels a day from Russia before the war. In theory, European customers could replace those barrels from suppliers in the Middle East, whose exports now mostly go to Asia, as well as from the United States, Latin America and Africa. Meanwhile, cheaper Russian oil could take the place of the Middle East shipments to Asia.

But it would take time for global markets to make that adjustment. In Europe, customers might scramble to reverse the usual east-west movement of oil using rail, truck and river barge. Refineries making gasoline and other products are set up for Russia’s particular kind of oil. Several major refineries depend on a pipeline from Russia.

Analysts at the Bruegel think tank say European countries should be ready to impose measures to reduce fuel use, such as making public transport free and incentivizing car-sharing. If those measures don’t work, tougher ones such as odd-even driving bans based on license plate numbers would be needed. Similar measures were taken during the 1973 OPEC oil embargo, when Germany imposed car-free Sundays.

“This would give markets enough time for a structural reorientation away from Russian oil,” the analysts said.

Phasing in a ban over the rest of the year would be one way to prevent shortages. Germany has already said it plans to end Russian oil imports by year’s end.

Prices for oil would likely go up, not just for Europe but for everyone, because oil is a global commodity and a net loss of supplies from Russia would be likely. That would mean higher costs for driving and heating fuel and more consumer inflation.

Russia is a major supplier of Europe’s diesel fuel for trucks and farm equipment, meaning its price affects those for a wide range of food and goods.


All of Russia’s oil couldn’t be redirected from Europe to Asia due to shipping and logistical constraints. It’s not clear to what extent buyers in countries like India and China would buy Russian oil if it means possible sanctions trouble with the West.

The OPEC oil cartel led by Saudi Arabia — which sets production levels along with allied non-members like Russia — has made it clear it won’t increase output to make up for any supply loss from Russia due to a boycott.

“It would be a major, major, major rebalancing of crude flows,” said Claudio Galimberti, senior vice president for analysis at Rystad Energy. “From a theoretical standpoint, it’s possible. From an operational standpoint, it’s more complicated because not everything can be redirected.”

Global demand for oil was already high as economies rebounded from the COVID-19 pandemic, and uncertainties over the war exacerbated the tight market and high prices. U.S. President Joe Biden has ordered releases from the strategic petroleum reserve to combat rising gasoline prices for Americans, while 30 other nations also have agreed to send more oil to the global market.

In the most severe scenario of a loss of Russia’s 3.8 million barrels to Europe and other countries refusing its oil, a huge price spike to $180 per barrel could happen, followed by a sharp fall due to declining demand and economic growth. However, “that does not look like it’s going to be the case,” Galimberti said.

Rystad’s expectation is a loss of 1.5 million to 2 million barrels per day and oil reaching $120 to $130 per barrel by year’s end.

A milder scenario, in which most Russian oil shunned by Europe is snapped up at a discount in other energy-hungry countries, would see a loss of only 1 million barrels per day. Oil prices would drop below $100 by June and keep falling to $60 by year’s end. That’s not too far from today’s situation, with some traders and banks shunning Russian oil even without sanctions.

“It’s a huge price range, but that’s reflective of the huge uncertainty we have on the Russian loss,” Galimberti said.


The price for Russia’s main export benchmark to Europe, Urals crude, has been knocked down to a $35-per-barrel discount compared to international benchmark Brent. Yet because of generally higher oil prices, Russia’s revenue losses have so far been limited. Those foreign currency earnings are helping prop up Russian finances amid sanctions.

“As long as Russian barrels find a market, then Russia is in business,” Galimberti said. “The moment they stop finding a market, that is the moment when oil prices shoot up and Russia will have serious economic problems.”

India’s Russian oil purchases since Ukraine invasion more than double 2021 total

Nidhi Verma

Mon, April 25, 2022, 5:03 AM

NEW DELHI (Reuters) – India has bought more than twice as much crude oil from Russia in the two months since its invasion of Ukraine as it did in the whole of 2021, according to Reuters calculations, as Indian refiners snapped up discounted oil that others have shunned.

Refiners in India have placed orders for at least 40 million barrels of Russian oil since the invasion on Feb. 24, Reuters calculations based on information from crude tenders and traders show. The purchases are for loading in the June quarter.

That compares with total imports of Russian oil into India of 16 million barrels in the whole of last year, according to Reuters calculations.

The world’s third biggest oil importer and consumer ships in over 85% of its crude oil needs of 5 million barrels per day (bpd). Its refiners are buying cheaper Russian oil to partly offset the impact of higher official selling prices of some producers like Saudi Arabia, company sources said.

“We try to insulate consumers as much from price shocks as we can, but we need to protect our profits as well… so we are buying Russian oil,” an official at one refiner, who declined to be named, said.

According to Reuters calculations, purchases of Russian barrels by private refiners Reliance Industries and Nayara Energy outstrip imports by state refiners Indian Oil Corp, Hindustan Petroleum Corp, and Bharat Petroleum Corp. [CRU/TENDA]

Reliance has purchased at least 15 million barrel of Russian oil so far for the June quarter, trade sources said last week. Reliance did not respond to a request for comment at that time.

Nayara Energy, part owned by Russia’s top producer Rosneft, has purchased 8 million to 9 million barrels of Russian crude for loading in April-May, trade sources said. Nayara did not respond to a Reuters email seeking comments.

Western sanctions against Russia since its invasion of Ukraine, which Moscow calls a “special operation”, have prompted many oil importers to shun trade with Moscow, pushing Russian crude’s discount to other grades to record levels.

While New Delhi has called for an immediate ceasefire in Ukraine, it has not explicitly condemned Moscow’s actions.

Defending India’s oil imports from Russia, the country’s oil minister Hardeep Singh Puri on Friday said that India’s purchases from Russia are a minuscule fraction of the country’s overall oil needs.

Indian companies are buying Russian oil on a delivered basis, with sellers arranging for shipping and insurance.

Washington has already said it does not object to New Delhi buying Russian oil below market rates, but warned against a steep rise in imports as that could hamper the U.S. response to the war in Ukraine.

Analysts said India’s Russian oil imports may taper off as a full-scale implementation of the European and U.S. sanctions from mid-May and late June might hit logistics.

Indian refiners’ capacity to process Russian oil is limited, and also there could be logistic challenges like insurance, tankers and payment mechanism once full European and U.S. sanctions against Russian kick in,” said Giovanni Staunovo, commodity analyst at UBS Group AG.

Already under pressure from sanctions, some trading houses are scaling back their dealings in Russian oil, he said.

(Reporting by Nidhi Verma; Editing by Jan Harvey)

Ukraine urges Johnson to ensure ‘not a drop’ of Russian oil reaches the UK

Rachel Millard

Sun, April 24, 2022, 10:23 AM

Ukraine’s government has urged the UK to ensure “not a single drop of Russian oil enters the country”, as it pushed for a “total and immediate” boycott on Russian fossil fuels.

Oleg Ustenko, economic adviser to President Volodymyr Zelenskyy, said it was “no time for half measures”. It comes amid concerns Britain may adopt a definition of Russian oil that allows some Kremlin supplies into the country, even under the impending embargo.

The UK Government is banning Russian oil imports to try and limit inadvertently aiding Putin’s war effort, giving UK buyers until the end of the year to adapt before the policy comes into force.

However Whitehall says it is still working with industry to “develop a clear definition of what constitutes Russian oil,” raising concerns that products containing some molecules from the country’s produce might still be allowed through.

Diesel and other refined oil products can contain a mix of supplies from several countries under long-standing industry practice or because they have been stored in mixed tanks.

There are also concerns that oil from Russia is increasingly being mixed with supplies from other countries to obscure its origin, as traders try to keep energy supplies flowing while avoiding criticism for aiding the Kremlin.

In a statement to the Telegraph, Mr Ustenko said: “We would welcome the UK engaging with Ukraine on how they define Russian oil – after all it’s our people being killed with the proceeds.

“For us, every drop of Russian oil is Blood Oil. For the UK to really stand alongside Ukrainians, we need to see a total – and immediate – boycott on Russian fossil fuels.

“Russia will always seek to find loopholes in whatever sanctions and policies the UK puts in place. This is no time for half-measures.

“The only way to avoid customers in Britain inadvertently helping Putin is to ensure not a single drop of Russian oil enters the country or is traded by UK-based companies.”

Shell, one of the world’s largest oil and gas companies, has pledged to withdraw from Russian oil products, but defines refined versions, such as diesel, as not being of Russian origin if less than 50pc of the blend is from the country.

The UK typically gets about 8pc of its oil from Moscow, almost all in the form of refined products diesel and jet fuel. Disruption to diesel markets amid the war has forced up UK diesel prices to an average 176.11p as of Sunday.

While Britain’s embargo is impending, the EU is still debating whether to ban Russian oil imports amid concerns over the impact on its own economy. Both the UK and the EU have also not yet banned imports of natural gas from Russia.

The UK gets less than 4pc of its gas directly from Russia but is connected to EU markets which are heavily reliant. Gas was flowing normally to Europe via Ukraine as of Sunday, Gazprom said.

Dominic Kavakeb, senior adviser at the campaign group Global Witness, said: “Every drop of oil we import from Russia is of direct benefit to Putin’s barbaric crimes against Ukraine.

“What is needed has been obvious since even before Ukraine was invaded; a full embargo on Russian oil – including blended oil – and gas that has given Putin both the resources and power to enact his bloody designs.”

A Government spokesperson said: “We remain absolutely committed to phasing out imports of Russian oil by the end of the year.

“We continue to work with industry to develop a clear definition of what constitutes Russian oil, one that will continue to provide an economic blow to the Putin regime.

“This will ensure industry have a clear understanding of what they can and cannot import.”

The UK Petroleum Industry Association, which represents filling stations, refiners and others involved in fuel supply, declined to comment.

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